Canada is a great place to start and grow a business. With innovative government programs, start-up incubators that nurture young businesses and a stable economy, small business owners across Canada are finding success in a variety of industries. But success does not come without obstacles, and we're all familiar with the "blood, sweat and tears" clichés related to launching a new business. October is Small Business Month in Canada, and so I thought it would be timely to review some of the challenges small business owners face and how they can overcome them.
Small businesses employ about eight-million people in Canada and represent 54 per cent of payrolls. While we know that small business is a significant contributor to the engine of Canada's economy, owners face many external challenges that can slow growth and limit success. In a new report from RBC Economics Canada's Small Business Landscape, 63 per cent of small and medium sized business owners cite the rising costs of inputs as an obstacle that limits growth.
Fifty-two per cent say fluctuations in demand are a key challenge, and 48 per cent cite increased competition. Small-and medium-sized business owners also report attracting and retaining talent as a major challenge -- especially when looking for skilled workers.
The good news, the report shows, is that small business financing is available and affordable. Twenty-six per cent of small-and medium-sized businesses sought external financing, with a success rate of more than 90 per cent.
While many obstacles may be unavoidable, here are some tips to help entrepreneurs succeed:
Challenge: Rising costs of inputs
Tip: Stress-test your balance sheet -- to protect against the rising costs of goods, forecast your cash flow and evaluate market demands. Also examine various scenarios to determine what impact the changing costs of goods can have on your business, and create a plan to minimize the impact.
Challenge: Fluctuations in demand
Tip: Understand your cash flow -- many businesses experience cyclical periods, and knowing how to manage your cash flow to get through busy and slow periods alike can make the difference between success and failure.
Challenge: Increased competition
Tip: Continue to foster innovation -- leverage your differentiators to set you apart from the pack. Are you faster, cheaper, more technologically advanced than your competitors? Make sure your clients know it and, more importantly, that they can see how your business can help them.
Challenge: Finding skilled talent
Tip: Establish a network and work on your reputation -- some small business owners tend to be independent-minded, but creating a robust network of clients, professionals, other entrepreneurs, friends and family will help you find the best employees. Treat your employees fairly and establish a reputation as a good place to work.
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