Even on those days when Canadian small and medium-sized business owners feel they aren’t quite getting as much done as they’d like, they should take heart in the fact that, according to the Business Development Bank of Canada, they’re still having a major impact on our national economy.
In High-Impact Firms: Accelerating Canadian Competitiveness, the BDC says small and medium-sized firms in the 100 to 500 employee range are contributing more than other organizations to Canada’s growth and even how we compare with other countries.
“They have enough resources to invest, innovate and export,” the study says, adding that key ingredients of high-impact firms include a strong desire to achieve and high-risk tolerance. “These spur an entrepreneur to unrelentingly pursue innovation and higher growth by investing and taking appropriate risks.”
For example, the BDC’s survey research of more than 1,000 firms found that entrepreneurs with higher risk tolerance had 10% greater revenue growth and 9% more international sales, and invested 5% more in innovation than moderately ambitious entrepreneurs.
On the other hand, there were four main challenges the BDC report identified that high-impact firms need to overcome if they are continue to succeed.
Challenge No. 1: Management Capabilities
Running a business isn’t just about having a set of products and services that meet a market need. The BDC says SMBs must also develop their ability to improve operations, plan strategically and boost sales. This is a complex mix of skills, but there are tools that can help ease the burden. For example, analytics that were once only within reach of large organizations are now available to Canadian companies of almost any size. Getting insight out of data can be an important step towards managing all the variables that can affect a business’s performance. And improving operations can become a lot more straightforward when you’re able to monitor much, if not all of it, via a smartphone app.
Challenge No. 2: New Markets
Canada may be large in terms of geographic size, but the number of potential customers beyond our borders will likely force many SMBs to think of expanding into the U.S. or internationally. That means, among other things, driving demand in places where there is little to no brand awareness of a company that launched here and nurturing prospects through the buying process. This is where marketing automation could offer a big payoff to firms that would otherwise lack the resources to create a one-to-one customer journey.
Challenge No. 3: Financing
Trust the BDC when it says that small and medium-sized businesses are often seen as a big risk for financial institutions that could lend them valuable capital to grow. There’s no magic bullet to obtaining financing or getting flexible terms on new projects and markets, but it helps when you’ve got a solid balance sheet with a strong sales pipeline. The better you’re able to cross-sell or grow within your current customer base (and cloud-based technology makes that a lot more doable), the more convincing a story you’ll be able to tell the banks.
Challenge No. 4: Labour
SMBs, like many other companies, will often point to their people as their greatest asset, but the BDC study suggests finding and keeping the right talent is becoming ever-difficult due to demographic shifts. This might mean employers will have to do more to ensure their teams feel cohesive and collaborative, whether during in-person meetings or via digital communities and social networking tools.
Everything in the BDC’s research suggests Canadian SMBs will continue to thrive.
When small and medium-sized businesses conquer these four things, it’ll be even more likely.