Despite a strong business environment, Canadian businesses must navigate considerable challenges to grow and drive profit each year. Attracting customers, increasing revenue, developing a skilled workforce, and driving innovation are just some of the areas where businesses feel the most strained. As identified in the Future of Business Survey, led by the Organization for Economic Co-operation and Development (OECD) and The World Bank, there are many challenges facing small and medium-sized businesses (SMEs).
The Future of Business Survey provides a wide look at many factors related to business constitution, confidence, and strategy. It’s a key measure used to determine business confidence, both currently and over the coming six months, for SMEs operating across the world. Through the survey’s results, it’s possible to better understand business conditions and recommend opportunities to become more globally competitive.
Fortunately, many of the top challenges identified in the survey can be minimized through planning and executing strategic projects. Better still, Canadian government grants and loans can be used to reduce the costs of these types of projects. Companies should use government funding whenever possible to overcome growth challenges and improve their future outlook.
Top Challenges Limiting the Success of Canadian Businesses
While the Future of Business Survey shows that Canadian SMEs are generally optimistic about the next 6-12 months, several challenges are still present. The top factors in the Q3, 2017 Survey include:
1. Attracting Customers and Increasing Revenue
While listed in the survey as two separate factors, attracting customers (76.4%) and increasing revenue (60.1%) are so highly related and often thought of as a common pain point. Right now, the vast majority of Canadian SMEs are feeling pressure to access new customers and steadily increase performance.
There are multiple ways a business might consider attracting new customers and increasing revenue. Some businesses are exploring new international markets to gain access to a new customer base, while others take a more innovative approach and develop new products or services to introduce to current markets. Both strategies can lead to the attraction of new customers and increasing sales.
2. Maintaining Profitability
Not only is it important to extend revenues, but businesses must also focus on limiting expenses to remain profitable. Staying ‘in the black’ and reporting profits on a consistent basis is a challenge for approximately 44.7% of Canadian SMEs, a figure that is high given the ability of most to adopt new, intelligent machinery and productivity systems.
Although the concept of ‘lean operations’ is most predominant in the manufacturing industry, all Canadian SMEs can adopt a similar way of thinking which largely revolves around continuous improvement exercises. Another strategy for SMEs is to increase the amount of machinery and automation used to generate profits. Reducing the need for salaried employees will help lower costs and improve this profitability.
3. Recruiting and Retaining High-Quality Employees
Businesses are built by people. To be a top performing business that competes internationally, organizations must focus on developing an “A team” of high-quality talent. However, the Future of Business Survey identified that 25.6% of Canadian SMEs are struggling to find and keep these types of quality employees.
With employee turnover on the rise, developing an effective recruitment plan and further developing staff through targeted training programs is often seen as the best strategy to overcome recruitment/retainment issues. Canadian government funding is widely available to support hiring and training initiatives, which can give a huge boost to SME human resources budgets.
4. Developing New Innovative Products
SMEs are catalysts of innovation. Being small enables better responsiveness to changing customer preferences, but it can be difficult to continuously innovate when research and development budgets are tight. Therefore, it’s not much of a surprise that 21% of Canadian SMEs consider developing new products or services to be a challenge, since there is more pressure than ever to keep innovating and stand out among competition.
But few businesses realize are the wealth of resources available to support research and development projects. Companies have many government funding options to support research, development, and commercialization activities. This can include collaborating with a post-secondary institution to access their equipment and talent, or performing research internally and using government grants to accelerate project timelines.
5. Financing Company Expansion
Like humans, most small businesses need to save money to afford large investments. Projects of a significant scale, such as facility expansion/relocation or the purchase of new, innovative technologies need to be thoroughly planned and well-executed by businesses to ensure they provide a benefit to company growth. Still, 21% of Canadian SMEs are challenged when it comes to securing financing for large projects.
What most small business owners and executives are unaware of is the full extent to which the federal and provincial governments support large company investments. Since these are the types of projects most likely to drive long-term company growth and success, Canadian government funding is available to support investments in production area, innovative equipment, and new market expansion.
Strategies to Overcome Small Business Challenges
It’s common for small business leaders to feel overwhelmed when trying to break through growth constraints. SMEs must overcome many challenges to survive, let alone thrive in global markets. But by developing growth strategies and using Canadian government funding to support these initiatives, growth and profitability can become much easier.
Free educational resources such as the popular Canadian Small Business Funding Guide can help business learn about creative cash flow planning methods to uncover new growth avenues.