SMEs bounce back from recession, but still face challenges: RBC
Rising input costs, demand fluctuations, and increasing competition are factors still causing problems for Canada's small businesses.
TORONTO — Canada’s small- and medium-sized enterprises (SMEs) are bouncing back after being buffeted by the recession, according to a new report from RBC Economics.
Despite this recovery, SMEs, which employ about eight million people and represent 54% of payrolls across Canada, say they are still facing a difficult operating environment in the report Canada’s Small Business Landscape, and cite rising input costs (63%), fluctuations in demand (52%), and increasing competition (48%) as major external obstacles limiting growth.
When looking at internal factors, almost 40% report employee recruitment and retention as major stumbling blocks to growth. The trend is even more prevalent among medium-sized firms (57%) where demand for qualified employees increases.
The report also found that obstacles to growth are regional in nature. SMEs in Saskatchewan and Alberta are most likely to cite labour shortages and difficulty attracting and retaining workers as major challenges, reflecting the tight labour markets in the Prairies, where there is heavy competition among firms for qualified workers.
In Ontario, businesses report fluctuating demand and increased competition as major obstacles.
Not all challenges are localized, however: worries about input prices, government regulations, and maintaining cash flow were cited as significant concerns across the country.
To overcome these obstacles, the report suggests SMEs consider the following strategies:
Do your homework:/strong> Market research is invaluable. Understand your market lets you make informed decisions in capital investments, entry into niche markets and upcoming treads, competitive benchmarking and customer expectations.
Understand cash flow: Forecasting cash flow is important and should be reviewed at least twice a year. It’s essential for determining how much money you’ll need to keep your business running.
Establish a support network. Business owners tend to be independent-minded and more inclined to solve problems on their own rather than ask for help. But shy away from asking for advice from people who work in your line of business. Other people to consider for your professional network include suppliers, customers, accountants, lawyers, and account managers.