Oct. 7, 2010 - What comes between Canada's small businesses and success? Cash flow. Managing clients. Government red tape. These top the list of the barriers faced by small business owners. But, despite the hurdles, 97 per cent of Canada's small business owners report that owning a small business gives them a sense of pride and accomplishment, according to the TD Canada Trust Small Business Survey.
"Without question, small business owners are a resilient group, continually working to overcome barriers that get in the way of their success," says Alec Morley, Senior Vice President, TD Canada Trust. "However, with 87 per cent of small business owners saying they are happier being their own boss, clearly there are strong advantages to business ownership, despite the challenges."
The challenges of small business ownership
As rewarding as it is to manage a business, there is no question that small business ownership has its difficulties. In addition to those barriers to success, small business owners cited several other challenges - the top three being managing, recruiting and training staff (24 per cent), coping with stress and risk (23 per cent), and financing and cash flow (22 per cent).
Overcoming challenges
To help meet financial challenges, Morley offers these three essentials strategies for small business owners:
1. Keep a close eye on the key metrics that are essential to your
business' success
"It is impossible to analyze every part of your business everyday.
Instead, ask yourself, what are those essential measures that
determine the health of your company? Whether it is speed of
inventory turnover, utilization rates or total cash in the bank,
ensure you have a system in place that provides an easy way to check
those numbers in real time."
2. Understand how to read an income statement and balance sheet
"Put yourself in the shoes of your investors, the bank where you
would like a loan, or a potential buyer down the road and make sure
you're at ease with how to read - and explain - your financial
statements. TD Canada Trust has small business experts available in
branches across Canada to help customers better understand their
business' finances and develop tailored solutions to overcome
specific challenges."
3. Forget the static five year plan
"Given the speed of business today and the impact of ever-changing
technology, a static business plan that lasts five years may be
unrealistic. Your business plan should be a living document, updated
at least annually with a rolling three-year forecast to make sure
your business stays on track. And it's essential to have both a long-
term vision for your company and a series of short-term goals. A good
small business advisor can help you to map out the financial
resources needed to take your business to the next level."
Small business and life balance
Despite their strong sense of pride and accomplishment, 59 per cent of small business owners say that they find it difficult to separate their business life from their personal life. Fifty-five per cent say they spend too much time managing their day-to-day issues and cannot focus on long-term growth and 54 per cent believe that owning their own business is more stressful than working for someone else.
Barriers to small business success
Seventy-seven per cent of small business owners surveyed say that cash flow management tops the list of barriers to success followed by managing clients (72 per cent) and dealing with government bureaucracy or red tape (70 per cent).
About TD Canada Trust Small Business Survey
The TD Small Business Survey examined the attitudes and behaviours of 711 small business owners in Canada. Small businesses were defined as those companies having 5 to 50 employees. The research was conducted by Environics Research between May 13 and June 15, 2010.
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