Small and medium-sized enterprises (SME) are the backbone of the Canadian economy and are defined as any business with 500 employees or less. That covers a lot of industries and many different challenges, but there are five barriers that all of them, especially small businesses, face.
1. Attracting high-quality employees
Employees are at the center of a successful business and employee turnover is a continuing issue.
The best way to tackle the challenge is to focus on effectively branding recruitment plans and training practices. Today’s employees are looking for a workplace that mirrors their values and takes into account their desire for a work/life balance.
Luckily in Canada both the provincial and federal governments offer grants for hiring and training. From hiring new employees to training long term ones in new skills, there are many programs to fit a variety of circumstances.
2. Enforcing contracts and collecting what you’re owed
The success of SMEs is often based on a limited number of contracts or customers. Issues of payment with one client can have a huge impact on the bottom line and can take a lot of time to resolve.
In 2017 the World Bank reported that in Canada it took 910 days on average to resolve such conflicts, up from 570 days in 2003. In comparison it only takes 420 day in the United States. Part of this comes from the tendency of Canadian courts to provide multiple opportunities to grant delays in an effort at fairness.
To help prevent this, be organized and provide clearly defined contracts that are easily available for review. Communicating well with clients can avoid unnecessary delays in payment.
3. Government regulation
Currently there are a lot of unhappy small business owners in B.C. as the government has just started collecting a new employer health tax. The tax rate is based on payroll totals, so it does take into account business size, and though they have lowered the corporate tax rate for SMEs to offset the costs, there is still concern.
Changes in regulations and taxes are constantly impacting bottom lines. It’s important to stay informed and partner with business organizations so as to have a say in potential adjustments.
4. Access to funding for growth
Traditional bank financing is often not an option for SMEs due to lack of available security for a loan. The Canadian Small Business Funding Program (CSBFP) makes it easier to get loans as the government shares the risk. Participating in the CSBFP can speed up the approval process and lower the interest rate so it’s a good idea to utilize this resource even with access to traditional loans.
5. Being ready to sell
Many privately-owned small businesses don’t think about this until it’s to late. Personal circumstances, market fluctuations and competitors looking to buy can come at any time, and many are not prepared.
To be ready have a clear outline of the businesses track record and financials for at least a few years and a clean balance sheet. Pay attention to assets and debt and be knowledgeable about market trends, the neighbourhood status of locations and new competitors.
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