Nearly a quarter of Canadian small businesses admit they are unable to identify key costs that they need to manage for success: survey
Angus Reid-Sage survey reveals â??financial literacyâ?? levels of small businesses
Montreal , QC (October 23, 2009) – Nearly one-fourth of Canadian small businesses polled admit they are unable to identify the most important costs that they need to manage in order to succeed, according to a new survey on ‘financial literacy’ conducted for Sage North America by Angus Reid Strategies. The survey was designed to examine the financial state of small businesses by focusing on their level of ‘financial literacy,’ as defined by how finances are managed, business owners’ comfort level with financial management, where financial information is obtained and how businesses are managing compliance with government requirements.
“The importance for small businesses to identify and manage costs that are key to the organization’s survival and success cannot be overestimated, particularly in the current economic environment, where decisions can have a significant impact on the bottom line,” said Jamie Sutherland, vice president and general manager, Simply Accounting. “Our main focus today at Simply Partnership 2009 is to educate and inform our partners on the advantages our products offer in this important area so they can help their clients be more comfortable with financial data and processes.”
The 17-question small business survey conducted by Angus Reid Strategies in October, 2009 showed that among 503 participants, 22% said they could not identify the “most important cost” that their business currently needs to manage. Various costs identified in the survey included capital expenditures, employee compensation, contracts and leases, advertising and marketing, inventory, travel, computer hardware and software and employee benefits.
Other highlights of the Angus Reid-Sage small business survey include:
oSmall business owners that have fewer employees or are newer organizations tend to be less financially literate. They are more likely to be located in Quebec and to some extent the Atlantic provinces;
oTwo thirds of small business owners surveyed said they have been negatively affected by the recent economic downturn, with 14% calling the negative impact ‘dramatic.’ Small business owners in Ontario were more likely (18%) to have been dramatically affected. The most positive responses came in Quebec, where 29% of small business owners said they have not been negatively affected and 9% reported growth;
oThe most commonly outsourced service today is accounting, as cited by 39% of businesses, while payroll is done in-house by 48% of business owners, and invoicing and billing are performed by 78% of businesses themselves;
oAs companies grow in size, they are more likely to delegate financial management tasks to employees. The most commonly delegated task in companies of six or more employees is invoicing and billing (59%), followed by payroll (44%), inventory management (41%) and accounting (33%);
oMore than half (51%) of small business owners identified cash flow as one of the two most important aspects of financial management that are crucial to businesses success. Other important aspects are invoicing and billing (44%), managing costs (36%), financial planning and forecasting (20%), tax payments (16%), inventory management (6%), payroll (4%) and EI/CPP compliance (1%);
oSmall business owners rely on diverse sources for advice on managing finances. The most common resource is an accountant or consultant, relied on by 65% of businesses, followed by the Internet (38%), contacts in the same industry (32%), government information (29%), friends and family (24%), books (21%), business or industry association (15%), mentors or former employers (14%), employees (4%) and business education services (4%);
oOn the question of compliance with government rules and regulations, business owners were most concerned about taxes, with 38% citing income taxes as their key concern, while 16% cited sales taxes.
The survey was conducted from Oct. 2 to Oct. 7, 2009, and the majority of respondents (58%) were the only employee of the business surveyed. Results have a margin of error of plus or minus 4.4%, 19 times out of 20.
Source: Sage