Canadian Small Business Owners Vulnerable to Everyday Risks

    
    American Express survey finds that time and money are obstacles to
    protecting small businesses against common business disruptions
    

MARKHAM, ON, Oct. 20 /CNW/ - The majority of Canadian small business owners are unprepared to deal with common disruptions that can impact their ability to do business, according to the latest American Express Small Business Monitor. Almost half of small business owners are unfamiliar with the practice of business continuity planning, which gives owners the ability to deal with everyday disruptions such as illness, flood, fire, power outages, computer viruses and Internet failures.

The quarterly monitor, published today, demonstrates the importance of planning for the unexpected, as two out of every five respondents have already experienced a "significant" disruption to their business. One Manitoba-based monitor respondent, for example, saw her business shut down completely for six months due to a flood to her premises. Another, an auctioneer from Ontario, lost his voice. Nearly half (46%) of the same group said the impact on their business lasted more than a month.

Nonetheless, small business owners find it difficult to address the threat: 80 per cent of respondents said preparing for potential disruptions is lower on their to-do list, or not even on their radar, and almost half (49%) don't have fire and flood insurance.

"Small businesses are a vital part of the country's economy, and given all they have to do, it's no surprise that they have very little time to invest in issues that don't translate to growth," said Howard Grosfield, VP & General Manager, Small Business Services, American Express Canada and International. "Business owners are laser focused on how to boost sales and profit, particularly during a recession. Business continuity planning, while a vital protection for small businesses, simply isn't going to make a company money in the short term."

Time and Money Hold Small Businesses Back from Planning Ahead

When asked how prepared they are to deal with a disruption compared to larger organizations, a mere seven per cent of small business owners said they are very prepared. But small business owners have not made planning a priority. Only 20 per cent stated that developing a plan to deal with disruptions is a top priority in the year ahead. Money was cited by 35 per cent as a hindrance to developing a plan, while a third of respondents said finding time was a struggle.

"Particularly in the first few years of a business, the owner tends to be the salesman, the accountant, the head of human resources and the secretary," Grosfield said. "That doesn't leave a lot of time for big-picture planning. As businesses mature, though, and growth allows owners to outsource some activities or hire additional employees, continuity planning becomes more realistic, both from a time and money perspective."

The monitor also revealed that the vast majority of Canadian small business owners have not taken precautions that cost little or no money. A full 75 per cent have yet to talk to their staff about how to handle or avoid a disruption. One respondent from Quebec admitted that if several members of his team are affected by seasonal flu or H1N1, he can do little more than "try to pick up the slack."

It's not all bad news however. Small business owners have noted several areas of proactive defense against the unexpected, including:

    
    -   Data back-up plan - 57%
    -   Emergency cash reserves - 34%
    -   Back-up power systems - 31%
    -   Catastrophic illness insurance - 20%
    

"There are many quick and inexpensive things business owners can do to shield themselves and for many, this is likely a simple matter of picking the right place to start," Grosfield said. "It is impossible to cover all the bases at once, but identifying crucial business functions allows owners to plan for potential risks that will have the biggest impact to their business."

Amex Small Business Index Climbs to 'C'

This quarter the American Express Small Business Index provides some cause for optimism. The quarterly index rose to C, or 64 per cent, an improvement from the first quarter grade of C-, or 61 per cent in March 2009. The index is designed to measure confidence, performance and attitudes of Canadian small business owners.

The small increase in the latest quarter reflects respondents' feelings that although the current business climate is still difficult, small business owners expect the situation to start improving. Nearly one third (30%) of Canadian small business owners now feel their business is on the upswing, while the proportion of those who feel their business is still suffering from a "slight" or "significant" downturn has dropped to 48 per cent from 56 per cent in June 2009.

Half of small business owners in Canada are hopeful that their business's future financial position is poised to get better. That said, 29 per cent remain worried that their financial position is about to get worse.

Still Worth the Effort, Despite the Stress

Stress levels caused by the state of the economy remain largely unchanged among small business owners, although the proportion of those not experiencing any stress has improved marginally to 13 per cent from nine per cent since March 2009.

After a slight drop over the summer months, Canadian small business owners are becoming re-energized. More than three quarters (78 per cent) agree that "the rewards and opportunities of running my own business outweigh the risks and challenges." In the next six months, 76 per cent are "very" or "somewhat" confident their business will grow. That confidence in the future is reflected in small business owners' willingness to take risks. Among those that are willing to take at least a moderate risk in the next six months, half are willing to invest in new equipment or other capital spending (versus 46 per cent in June), and a third are willing to use personal assets to cover their costs (versus 28 per cent in June).

"The recession still lingers for many small businesses as we enter the last quarter of 2009, and while owners are still feeling stress, their resilience shines through," Grosfield said. "The fact that businesses are increasingly willing to spend on capital is a sign that recovery is on the horizon."

About the American Express Small Business Monitor

From September 24 to September 28, 2009, Angus Reid Strategies conducted an online survey on behalf of American Express Small Business Services among a randomly selected, representative sample of 504 Canadian small business owners who currently have two to 100 employees. The margin of error for the total sample is +/- 4.4%, 19 times out of 20. The results have been statistically weighted according to the Statistics Canada Business Register's most current business size and region data to ensure a representative sample of the entire population of small business owners in Canada. Discrepancies in or between totals are due to rounding.

About American Express Small Business Services

American Express Small Business Services (SBS) is dedicated exclusively to the success of small business owners and their companies. SBS supports business owners with exceptional service. With tailored products and services, the team delivers purchasing power, flexibility, control and rewards to help customers run their business. Specifically, business owners can leverage an enhanced set of products, tools, services and savings, including charge and credit cards, robust online account management capabilities and savings on business services from an expanded lineup of partners. To obtain more information about SBS visit www.americanexpress.ca/smallbusiness.

About American Express in Canada

American Express in Canada operates as Amex Bank of Canada and Amex Canada Inc. Both are wholly owned subsidiaries of the New York based American Express Travel Related Services Company, Inc., the largest operating unit of the American Express Company. Amex Bank of Canada is the issuer of American Express Cards in Canada. Amex Canada Inc. operates the Corporate Travel, Travel Services Network and Travellers Cheques divisions in Canada. American Express opened its first offices in Toronto and Hamilton in 1853 and now employs 3,700 Canadians coast-to-coast.

SOURCE American Express

For further information: For further information: or a full copy of the report, please contact: Cheryl Kim or Tom Sargent, Edelman, (416) 979-1120 ext. 305/250, cheryl.kim@edelman.com, thomas.sargent@edelman.com; Jolene Price, American Express Canada, (905) 474-8746, jolene.price@aexp.com

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