A new report suggests small businesses in British Columbia, inlcuding Kamloops, ended 2025 on a difficult note. Business advocates say many owners are feeling the squeeze from rising costs and weaker consumer spending.

Data from accounting platform Xero Small Business Insights shows small business sales in B.C. dropped 8.2% in the final quarter of 2025, roughly double the national decline of 4.1%.

Jeremy Heighton with the Business Improvement Areas of B.C. says the numbers reflect what business owners are already seeing in their day-to-day operations.

“I was talking to a restaurateur this morning on my way to the office, and he really summed it up well,” Heighton said in an interview with RadioNL. “The inflationary costs of everything that goes into what they sell have gone up. When costs go up, prices go up. When prices go up, fewer consumers show up.”

Heighton described the situation as a “vicious circle,” where rising costs force businesses to raise prices, ultimately driving customers away.

“When you look at the sales data across the country, the actual flow of money is lower because fewer consumers are coming into each business,” he said.

Businesses feeling the squeeze

Heighton, who is also the Executive Director of the Norh Shore Business Improvement Association, said informal polling of businesses earlier this week showed sales declines typically ranging between six and 10%, aligning closely with the Xero findings.

He said many owners have already tried to absorb rising costs by reducing profits, adjusting staffing or tightening expenses — but those options may be running out.

“In the polling I did this morning, most businesses said they don’t have a lot of money left in the bank,” Heighton said. “They can borrow if they want to, but that’s expensive.”

He warns that if the trend continues, some businesses may not survive.

“Unfortunately, I think it’s going to lead to some increased business bankruptcies across British Columbia.”

Government numbers disputed

The provincial government has pushed back on the Xero report.

B.C.’s jobs minister Ravi Kahlon told Global News that Statistics Canada data shows the province leading the country in active businesses and retail sales, suggesting the overall business climate remains strong.

Heighton says the difference may come down to how the data is collected.

“The challenge with data is that it can be interpreted in a variety of ways depending on the dataset,” he said.

According to Heighton, Xero’s information is based on real-time transaction data, which he believes offers a more immediate picture of what small businesses are experiencing.

“We also have our own dashboards pulling data from payment systems like Moneris, and they all line up with roughly this 8% decline,” he said.

Concerns over new PST expansion

Heighton also criticized the province’s decision to expand the Provincial Sales Tax to cover more services, including some commonly used by businesses.

He argues the move adds to an already growing list of pressures.

“Expanding the PST hits every business in British Columbia — there are no exceptions,” Heighton said. “You combine taxation, tariffs, supply chain issues and rising costs, and it’s just piling up.”

BIABC representatives are scheduled to meet with provincial officials next week to discuss their concerns.

“Our hope is the provincial government listens with a fulsome ear and really thinks about how we incubate small business — not how we defeat it,” he said.

Focus on local spending

Despite the challenges, Heighton says encouraging people to shop locally could help ease some of the pressure on small businesses.

He estimates between $3.8 billion and $4.2 billion in consumer spending currently goes to online retailers each year.

“Imagine if we could put that back into the hands of small businesses that support the communities they’re part of,” he said.

For now, Heighton says the sector will be watching closely to see whether conditions improve through 2026 — but he expects business owners to remain cautious.

“I think it’s fair to say we’re going to be looking at the rest of this year with a much more critical lens,” he said.