All business owners know the value of attracting clients. But, many new owners are too focused on uncontrollable issues like the economy, says a new CIBC poll.
Rather than monitoring their cash-flow management and financings, the majority of owners are too worried about how the weakening economy will affect their businesses during the first few challenging years.
However, established owners—those in operation for six years or more—say entrepreneurs should turn a blind eye to headlines and disappointing data. They should instead focus on overcoming these three common obstacles:
- Attracting or retaining customers
- Fluctuations in cash flow
- Having access to adequate capital/financing
The economy certainly has an impact on success, but new businesses will never survive if they fail to meet these significant challenges, the study finds. Instruct your clients to also consider the importance of finding innovative ways to serve their customers, as well as keep track of their major competition.
“When you first start up a business, you absolutely must keep an eye on your cash flow and have a good source of financing to support you over the short term,” says Jon Hountalas, executive vice president of business banking for CIBC.
He adds, “It’s easy to be caught up in the latest economic news, but the reality is you need to ensure your business has the cash needed to fuel growth and support the business through a challenging time.”
The poll finds nearly one-fifth (19%) of all established business owners stress the importance of mentors. By drawing on a veteran’s expertise and collecting financial tips, entrepreneurs can gain an advantage.
“Some successful owners have benefited from advice about how to manage their money in the early years of their business,” says Hountalas. “You can strengthen your business significantly by building a connection with a relationship manager who knows your business and goals.”
Tips for new business owners:
- Understand and anticipate your day-to-day cash needs by creating and regularly updating your business plan
- Ensure you have financing available to tide you over through short-term gaps in cash flow. Don’t wait for a rainy day to occur before applying for financing
- And before seeking financing, determine what information investors and financial institutions will need before they make a decision. Make a list of items, keep track of deadlines, and get advice from a mentor if possible.
Read: Building your business