Small business owners in Ontario are headed into 2017 feeling less optimistic than last year, finds a poll by Meridian Credit Union.
The survey found 67% of small businesses expect growth this year, down 11% from 2015.
“I’m not surprised about these results, because when the economy becomes unpredictable, small businesses feel it first,” says Geordan Robertson, director of small business for Meridian. “We’ve noticed that many small businesses are approaching us with cash flow concerns, especially those who were not conservative when they were running a surplus. These entrepreneurs are looking for solutions that they can’t find with their current financial institutions.”
The study revealed that 52% flagged cash flow as their top concern with economic uncertainty coming in second at 51%. Changes in fluctuating currency made 38% uneasy, and provincial legislation changes concerned 37%. Further, 23% are worried about finding good employees.
The surging real estate market also draws red flags with some small businesses. While 57% agree that the current market is unsustainable, only 12% say that the real estate market is negatively impacting their business expansion plans. Findings include:
- 24% indicate they will hold off on making a real estate purchase because of the uncertainty
- 35% feel a less expensive option would be to lease rather than purchase a business property
- 17% say the current market has provided positive opportunities for their business expansion plans
- 20% agree that the current real estate market generated positive effects for their business
- 20% have been prompted to adopt a virtual work environment
“The real estate market is definitely influencing the way small businesses operate,” says Robertson. “We’re seeing some of our members either race to purchase real estate, or liquidate some or all of their real estate holdings and turn to leasing instead. And as the results indicate, many are adopting virtual environments to cut down on capital costs.”
Robertson has a few tips for small businesses, which you can pass on to business-owning clients:
Stay conservative if you’re running a surplus: Keep your costs down, remain conservative and put the extra funds aside.
Capitalize on surplus funds: Ensure that you are earning interest on those surplus funds.
Separate personal and business credit cards/lines of credit: Business lines of credit should be separated from personal, otherwise you can run up personal expenses all too quickly and easily, compromising your business cash flow.
Understand the days’ receivables and payables: Manage your cash flow better when you work around the payable and receivable days. It may take 60 days to get paid from a client, but you may also have 60 days to pay your supplier. If you work around these timelines, you can establish a rhythm where you’re making your money go further in-between paying and receiving payments.
Keep up with the news: – Changes in currency, government legislation, taxes and the stock market can impact your business. If you’re informed, you can make quick decisions that can save or make money.