We're smack dab in the middle of earnings season, and results have largely been on the positive side. Major players on the TSX, the NYSE and the Nasdaq have surpassed expectations. Those companies with national profiles are the ones you hear about most often in the media. It's no wonder that many people think they are the most important enterprises in our economy.
But it's important to remember the importance of small businesses. These are companies with fewer than 100 employees. There are more than one million Canadian businesses that fit this description. In fact, almost half of Canada's private sector workforce is employed by small business. Its impact is immense — small business accounts for about one quarter of Canada's GDP. Unfortunately, the recession had a negative impact on three out of every five small business in Canada. But things are looking up. According to the 2009 TD Canada Trust Small Business Survey, more than half (57 per cent) of small business owners say they are excited or optimistic about 2010. To help ensure success in your new or continuing business venture, I have five useful strategies.
Watch your cash flow
What keeps business owners up at night? After the impact of the recession, cash flow tops the list of concerns. Small business owners say they continually worry about covering payroll and being able to pay suppliers. Investors pay attention to cash flow at the biggest businesses on the planet. And you should pay close attention to yours.
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Cash flow management is the single most important aspect of running a small business. With good cash flow, anything is possible — hiring good talent, expansion, access to credit, and producing a profit. Without it, it's almost impossible to succeed.
Find a good advisor
The expression "it's lonely at the top" can be very true for small business owners. It can be tough when you are the one running the company and there is no one in the office you can turn to for counsel.
Find an advisor you can trust — someone who will listen to your unique issues and provide solid advice on how to solve problems.
Develop your unique selling proposition
Understanding how your business stands apart from the competition can be key to successful business planning, effective marketing and sales. This begins with the development of a unique selling proposition, that defines your company's key focus.
The top three unique selling points cited by TD Canada Trust Small Business Survey respondents are "to provide the highest level of service in our industry" (33 per cent), followed by "to provide the best products/results in our industry" (25 per cent) and "to provide the best expertise in our industry" (19 per cent).
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Formula for success? Stick to what you do best
One of the top strategies for maximizing success is to stick with what you do best and outsource the rest.
This means that if your business makes shoes, focus your efforts on making the best shoes possible and hire experts to help you with other areas of the business you are less experienced in, such as IT support, HR practices and investing strategies.
Run your business as if you are selling it tomorrow
The Small Business Survey showed that the majority of small business owners feel they should start thinking about transitioning their business two years in advance, with only a small percentage planning more than five years in advance. Less than one-quarter of businesses currently have a succession plan in place, down from 27 per cent in 2008.
* Video: How Cdn. small businesses are making it throught the economic downturn
Although transitioning your business — for example, selling it or transferring it to a family member — might be many years away, it is sound business practice to operate your business every day as if you are preparing to sell. "This means always following generally accepted accounting principles, staying on schedule for supplier payments, minimizing debt and reducing costs wherever possible," says Christine Morris, vice-president, sales and service, business banking at TD Canada Trust.
Entrepreneurs who adhere to these strategies won't always be small business owners. Many of the biggest companies in Canada started with just one or two employees. Look at Research in Motion. The once tiny company founded by Jim Balsillie and Mike Lazaridis has grown into one of the world's most important wireless device companies. Blackberries are everywhere — even I have one.
What I'm trying to get at is this: As a small business owner, the entrepreneurial spirit and innovation you provide are vital to the Canadian economy.
Following these simple principles will help guide you on your path to success.
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