New business owners, including rookie advisors, may be too focused on issues outside of their control such as the economy, suggests a new CIBC poll.
This is in contrast to the advice of more established business owners that point to cash flow management and financing as the keys to getting through those first few challenging years.
Looking back at their first few years in business, established business owners (those in operation for six years or more) rank the following as the top three significant obstacles they had to overcome to be successful when they started out:
attracting or retaining customers (56%)
fluctuations in cash flow (42%)
having access to adequate capital/financing (40%)
Comparatively, while newer small business owners also listed attracting or retaining customers as the most common obstacle they must overcome to be successful (52%), they follow with: economic uncertainty (40%); and strong competition from other businesses in their industry (36%).
The findings suggest that new businesses could learn from their more established peers who have succeeded by refocusing their priorities on those aspects of their business that are within their control, including having a strong financial foundation to drive growth, solid cash management, and client focus.
“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,” explains Jon Hountalas, executive vice president, Business Banking for CIBC. “While it’s easy to be caught up in the latest economic news or concerned about your competitors, the reality is that you need to ensure your business has the cash it needs to fuel growth and support the business through a challenging time.”
The poll also reveals that nearly one-fifth (19%) of all established business owners say that a lack of expertise to draw on, including financial advice, was an obstacle they had to overcome to be successful in their first few years of business.
“When they look back, some successful business owners realize that they would have benefited from advice about how to manage their money in the early years of their business,” notes Hountalas. “You can’t be an expert in everything, but you can strengthen your business significantly by building a connection with a relationship manager who knows your business and can assist you with cash management advice, or arrange the financing you need to move your business forward.”
The CIBC poll was conducted online by Léger Marketing poll was conducted online in every province of Canada with a representative sample of 801 decision-makers in Canadian companies between July 3 and July 12.