If you are running one of the 1.1 million Canadian Small-Medium-sized Enterprises (SME) and are facing the choice of either paying back your debt, upgrading existing equipment or hiring a trend-watching professional with finite resources, worry not, you are not alone. Be it Zara, McDonalds or Apple, all the leading businesses that we witness today have been through the same situations that you’re now facing. Moreover, in business, just having available resources is insufficient.
Resource scarcity within your company notwithstanding, there is good news. Being located in Canada, the world’s third easiest country in which to start a business, gives entrepreneurs a leg up from the beginning. Armed with the confidence this ease of start up provides and their passion, founders should set aside excuses and tackles challenges head-on. Still, it’s not easy to be an entrepreneur in a rapidly changing world of needs and wants, especially when the growth is one's sole focus and unexpected expenses arise.
In many instances, financial set-backs brought about by unanticipated expenses forces entrepreneurs to step back and shut down their dream ventures; it's one of the main reasons why the rate of new firms’ survival is 51% in Canada. So, if you want to lead your industry in the coming decades, then prepare for the unexpected and employ strategies for resource acquisition that require outside the box thinking. With such revamped strategies, the quantity of available resources will not hinder your next move.
Challenges Restricting Growth of SMEs – Every Business Needs Resources
Some of the top challenges (or excuses) faced by Canadian SMEs are:
We are unable to attract sufficient customers. That is why our revenue is not as projected.
Recruiting and retaining high quality employees is difficult.
Profit consistency is still a challenge.
Lack of innovation with our products leads to stagnation.
Expansion is not an option.
All these weaknesses can be thought of as symptoms for one common and underlying root cause - a lack of effectively applied resources.
All businesses, including SMEs, need resources to expand. However, what if a business cannot immediately arrange resources? There are strategies that can be implemented to reallocate the resources or find other sources to achieve your goals.
Let us quickly overview them.
Most entrepreneurs feel pressure to locate new customers. If your product is no longer attractive to existing customers, your target market may need to be shifted and new demographics acquired.
There are two ways to address this - either find a new customer base via exploring new markets or find innovative approaches to create a need among your potential customers. The latter requires fewer resources.
Want an idea to expand your consumer base that is relatively resource sparing?
How about finding customers via social media? You can create a buzz around your product with interesting pictures and stories, easy online ordering, relevant reviews by existing customers, or special enticements such as giveaways, coupons, contests, loss-leaders, or discounts.
“You can close more business in two months by becoming interested in other people than you can in two years by trying to get people interested in you.”
Dale Carnegie, Writer & Lecturer
We cannot ignore the importance of the workforce in any business. A survey identified that 39% of Canadian SMEs are unable to find and keep a qualitative workforce.
Here is the unglamorous fact of the matter: hiring a skilled labor force requires an intelligent yet effective recruitment plan, inclusive of much more than just money. Top talent is seeking on-the-job training, internal development, a pleasing social setting, recognition of effort and achievements, leadership, and advancement potential.
Added Incentive
The Canadian government is willing to fund and support hiring or training initiatives for different organizations. As a business owner, you can reduce your Human Resources budget by displacing superfluous employees or an in-house HR team with a hiring agency specially equipped to recruit the right people for you.
Outsourcing and implementing a strategy inclusive of freelance employees will also reduce the headache of retaining the workforce and improve labor turnover. Of course, the decision should be aligned with the overall business strategy.
Cutting down expenses can increase profits. If a product is attractive enough to convert evermore leads into paying customers and still company profit is declining, it means that there are flaws in company's expenditures that require urgent attention. More Canadian SMEs are at this stage in their venture life; staying ‘in the black’ will get easier once you understand and analyze your cash flow, day-to-day expenses, and other overhead.
Where should you start? Deligate, eliminate, and automate. Deligate value-added tasks to existing human resources wherever possible (i.e. staff) to avoid having to pay others to do these things. Eliminate those expenses which do not yield sufficient return on investment or are non-critical to your product and services. Automate processes using software applications that can save time and money. Research and implement more cost effective production methods, adopt new yet intelligent tools to increase productivity, and trim costs relentlessly.
Another strategy might be to reduce the number of salaried employees. If it makes sense, try hiring leased and job-share employees as this can diminish associated costs and improve the level of productivity.
Being catalysts of innovation, businesses, especially SMEs, are very responsive to customers’ changing preferences. However, who bears the cost of this innovation?
With changing consumer behavior, patterns, and tastes, innovation was never more demanding than it is today. To stand out among competitors, Research and Development (R&D) is the essential, yet oft overlooked business practice. Business owners bogged down by some many peripheral demands of their business forget to continuously improve their value proposition.
One possible way to finance your R&D department is to utilize the advantages offered by the Canadian government. They offer programs and incentives that can be quite positive in funding research, development, and commercialization practices. This includes collaboration with any post-secondary institution for talent and equipment. It would also be prudent to look into government grants that are beneficial to your business.
5. Find alternative financing opportunities
There is more good news for the Canadian SMEs who are unable to generate enough profit to afford large investments like facility relocation, technological revolution, innovation, etc. Canadian government funding is widely available to support in multiple areas - market expansion, equipment, production, servicing, and more. Furthermore, some banks partner with the government to offer guaranteed loans to businesses with proven track records and skin in the game.
There are self-reliant options too, such as diversification of Channels of Financing. In finance, there's a concept of allocating capital in a way that reduces the exposure to any one particular asset or risk. It means that a company should invest in different assets instead of keeping all investments in one place, which increases the risk. This concept is called the Diversification of Channels of Finance.
Success inhibitors are lessened when you are prudent enough to research and decide your pathway to break them.
Nothing is IMPOSSIBLE when your DREAM BUSINESS is calling
Be it an absence of capital, managerial skills, customer information, proper planning, workable procedures, risk assessment, or lack of focus, your diligent attention is required to have sufficient time to foresee and avoid pitfalls, and then proper timely remedial actions can be taken. You must employ Key Performance Indicators (KPIs) to alert you to opportunities and perils that require your attention.
“You cannot manage something you do not measure.”
So, whenever you face any challenges when running your dream business, look to the experts to help revamp your strategies to implement a positive change.
Are you having trouble revamping your strategies? Are you facing hurdles over budget allocation and wealth management? Talk to our Wellth experts at Bickert Management to help you achieve your goals.