Life as a small business owner in Canada is often met with harsh challenges. From fatigue to figuring out how to stay competitive, operating a small business is not for the faint of heart.
Find out how to conquer your small business challenges.
Most businesses, especially a one person business, are driven by the owner’s relentless effort, determination, and passion. As such, small business owners in Canada work approximately 30% more than the average employee.
The long hours, constant pressure, and lack of downtime present a significant challenge. These factors are also the perfect recipe for the gradual onset of fatigue. In mild cases, symptoms include impaired decision making and recollection. Left unchecked, severe fatigue leads to exhaustion and severe medical complications.
Combat fatigue by exercising regularly, drinking plenty of water, and eating a balanced diet. Lastly, get to bed early. You might think the stack of invoices or your newsletter need be completed today. Think again. If you are consistently not rested and operating in a zombie like state, you can kiss your business goodbye. Your health is now your top priority.
2. Staying Competitive
One of the toughest small business challenges is staying relevant. Consumer tastes and demands can shift rapidly and they have more power than ever before. This means you have to defend your position and maintain your competitive edge.
First of all, know your competition. Find out exactly who they are and what they are about. You’ll want to differentiate yourself and develop a unique selling position that is difficult to copy. Next, get to know your customers intimately. Understand their expectations and preferences. Lastly, look to the future and stay on top of emerging trends in your space.
3. Client Dependence
Frequently, a small business owner will depend on a handful of clients for a lion’s share of their income. This is particularly relevant for consultants and contractors. If your client experiences setback in a market downturn then your business will be in a difficult position when they scale back on expenses (including your services). While you may be lulled into a sense of comfort and security, you are at risk of failing almost immediately if you become over dependent.
Identify your current dependencies. Diversify your client base and ensure no single client represents over 30% of your income. Limit or turn away business that represents a dangerously large part of your total earnings. Even though it will be very tempting, you are playing with fire. Continue your marketing and constantly develop new business. Expand your revenue streams by replicating your high value clients. By avoiding dependency you will significantly lower your overall risk profile.
4. Financial Management
83% of Canadian small business owners have a basic or lower grasp of financial fundamentals. Gaining a deep understanding of the intimate financial operation of your business is particularly challenging when the majority of your time is spent servicing and developing clients. Unfortunately, it won’t matter how many new clients you engaged in the previous quarter if you have no cash to pay for your current liabilities. Your sales might look healthy on paper, but your bank account might be in terrible shape. Cash is king and understanding why is critical for your business to survive.
Keep in mind the complexity of your business will increase with each new client you engage. Your present day challenge needs to be conquered sooner (right now!) than later.
If you are not financially literate, take a couple of courses online or at your local university. If you don’t have enough time, then bite the bullet and hire an excellent accountant that will work with you closely on a monthly basis. Sound professional guidance is an invaluable investment.
5. Health Insurance
Health insurance for small business owners is a real challenge. Insurance plans are expensive, restrictive, and complicated. You are charged a monthly premium regardless of access or usage to the plan. There are deductibles. Items that you wish to claim are often restricted by an annual or lifetime maximum. These plans eat into your profits.
Many small business owners circumvent the challenge by opting to pay for their medical expenses out of pocket. Laser eye surgery, orthodontics, and chiropractors are so poorly covered by traditional insurance that the small business owner ends up paying for the expenses with their own after tax dollars.
Consider establishing a Health Spending Account for your business. A Health Spending Account is an alternative to traditional health insurance that has been widely adopted by Canada’s small business community. These accounts are established to exclusively pay for healthcare services for you and your family members. Your business deducts 100% of the cost and you receive the benefits 100% tax free.
Are you a small business owner in Canada? Learn how to boost your profits and lower your tax bill by downloading our free Health Spending Account guide.