RBC provides advice to survive and thrive amidst barriers to success
TORONTO, Sept. 30, 2014 /CNW/ - Canada's small- and medium-sized enterprises (SMEs), which employ about eight million people and represent 54 per cent of payrolls, are bouncing back after being buffeted by the recession, according to recent RBC Economics' report entitled Canada's Small Business Landscape.
However, despite this recovery, SMEs still face a difficult operating environment, and cite three major external obstacles that are limiting their business growth: rising input costs (63 per cent), fluctuations in demand (52 per cent), and increasing competition (48 per cent).
"While SMEs were hit hard during the recession, it's clear that they are staging a comeback – the number of small and midsized firms reached a record-high in 2012," said Gerard Walsh, economist, RBC. "Still, SMEs continue to worry that cash flows will not be strong enough to allow them to grow in a meaningful way."
When looking at internal factors, almost 40 per cent of SMEs report employee recruitment and retention as major stumbling blocks to growth, according to RBC's report. The trend is even more prevalent among medium-sized firms (57 per cent) where demand for qualified employees increases.
The report also found that obstacles to growth are regional in nature. For instance, SMEs in Saskatchewan and Alberta are most likely to cite labour shortages and difficulty attracting and retaining workers as major challenges. This reflects the tight labour markets in the Prairies, where there is heavy competition among firms for qualified workers. In Ontario, the heart of Canada's struggling manufacturing sector, 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.
"Small- and medium-sized businesses are the backbone of many communities and an important driver of Canada's economic growth and future prosperity," said Sarah Adams, vice-president, Small Business, RBC. "Regardless of their background, experience, location or industry, being an entrepreneur is challenging even in favourable economic conditions. We're here to partner with businesses to help them grow and prosper, and providing financial solutions is only part of our role."
To thrive in the face of obstacles, Adams provides the following advice for business owners:
- Do your homework: Market research is invaluable to your success. Understanding your market lets you make informed decisions in capital investments, entry into niche markets and upcoming treads, competitive benchmarking and customer expectations.
- Understand your cash flow: Forecasting cash flow is very important for any business 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 don't be shy about asking for advice from people who work in your line of business. You'll be surprised how many are willing to share industry information or serve as sounding boards for your ideas. Other people to consider for your professional network include suppliers, customers, accountants, lawyers, and account managers.
About RBC Small Business Banking
Small businesses in Canada want flexible banking choices, convenient payment options and simple ways to manage their cash flow. Whether they are starting a business, managing growth, or succession planning, the RBC Advice Centre or Starting a Business website can help answer their questions. Free interactive tools and calculators provide customized information covering many facets of business finance and online advice videos are updated regularly to answer questions that are top of mind with small business owners. RBC Group Advantage is a comprehensive program providing employees with advice from qualified investment specialists and financial advisors and also offers flexible plans -- including group RRSPs, group savings and group bank -- as well as a mortgage relocation program, to help small business owners attract, retain and motivate productive, long-term employees. With the guidance of RBC business advisors, small business owners have access to free, no obligation professional advice about RBC products and services. For more assistance, please visit www.rbcadvicecentre.com.
The full RBC Economics report is available online as of 8 a.m. ET today. The report comments on a range of SME focused topics, including: how they have recovered since the recession, where firms are starting up and in what industries, who own SMEs, how many high-growth firms there are in Canada and what drives them, among other topics.
For further information: Suzanne Willers, RBC Communications, 416-974-2727; Kate Yurincich, RBC Communications, 416-974-1031; Elyse Lalonde, RBC Communications, 416-842-5635