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Canadian Small Business Owners: “Lacking in Financial Literacy”

There is both good news and bad news when it comes to the level of small business financial literacy possessed by the average Canadian small business owner. The results of a recent small business financial literacy quiz conducted by Intuit Canada show that more than 8 out of 10 respondents failed to achieve a score of “good or basic knowledge” or better. Nearly half of these respondents revealed “well below basic knowledge.”

Put another way, only 17 percent of respondents achieved a score of “very good knowledge” or better, and only 2% said they have “great knowledge.” The quiz consisted of 10 questions about business financial fundamentals, such as what is the role of the balance sheet and how can short-term cash flow be improved?

What’s the Good News?

That’s the bad news. The good news is that a majority of the respondents said they understand that financial management is important to the success of their business and they need to start closing the “knowledge gap.” Specifically:

  • 42 percent said they wanted to spend more time with an accountant.
  • 24 percent said they would benefit from information sessions with other small business owners.
  • 22 percent said they would benefit from online tutorials.

The study indicates that small business owners’ use of financial literacy tools and resources increases their financial management confidence. Three-quarters of respondents who use financial software are confident that they have a good knowledge of accounting principles. Only 16 percent of respondents who rely on their own financial knowledge expressed this same level of confidence.

Up Close and Personal

In our position as small business financial consultants, we see the reality of these statistics up close and personal every day. Most entrepreneurs start businesses because they have particular talents or skills when it comes to manufacturing and delivering a product or providing a professional service – not because they are financial experts. However, they quickly learn that a good level of financial knowledge is very important to achieving success.

It’s not uncommon for an entrepreneur to have a great business idea or product, a strong distribution system and/or sales force, a crack customer service team and raving customer reviews – only to fail because it suffered from poor cash flow.

You’ve probably heard it said before that “cash flow is the lifeblood of a business” and it’s true. Companies can often withstand short-term periods of slow sales, and even unprofitability, but a lack of cash flow can prove fatal – even to companies with strong sales and high profits.

Cash Flow Solutions

If your company is suffering from poor cash flow, you owe it to yourself to speak with a small business financial consultant willing to sit down with you and help analyze your situation and suggest solutions. Often, these involve asset-based lending (ABL) solutions like factoring and accounts receivable (A/R) financing.

A full-service factoring company will purchase selected receivables on an ongoing basis for a small discount to provide immediate cash flow for your business. This form of financing is widely used around the world – credit card companies are essentially doing the same thing. The elimination of a “receivables lag” can mean the difference between success and failure for businesses with a lack of working capital, or those that are operating with long or unreliable cash conversion cycles.

An A/R financing company will lend to a business based on the total value of its eligible receivables. There is a subtle but important difference between this and factoring receivables outright: With A/R financing, the receivables become the primary collateral, a workable advance rate is established, and the company is able to call upon funds based on the “borrowing base” of eligible receivables.

Many business owners fail to seriously consider these two options because they are unaware of how they work. They don’t realize how quick and easy it is to qualify, or the many advantages of these options over traditional financing. And many think they are simply too expensive but fail to ask themselves, “Compared to what?” The result of doing nothing is sometimes the loss of the business or bankruptcy.

Don’t Be a Statistic

Statistics indicate how hard it is to be a successful Canadian small business: While 85 percent of Canadian small businesses make it through the first year, only 51 percent are still around after five years. How many of these failures could have been prevented with a bit of knowledge and a stronger grasp of business financial management?

If you own a business or know someone who does, you are in a position to alter the statistics directly. Start by learning about or improving your knowledge of alternative financing solutions. The success or failure of many Canadian small businesses may depend on it.

How Virtual Assistant Services Can Help You Achieve Your Business Goals

In today’s business climate you cannot afford to overlook what an asset virtual assistants are to the growth of your business. If you hire the right virtual assistant, you have not only a remote employee but a business partner… all in one!

Many times virtual assistants are business owners themselves. They understand what it takes to run a business. They also understand business goals and many times they know various avenues to meet them. In business what matters most and what must always be at the forefront of your focus is not the level of success you have already achieved, but the ensuing level of success you wish to achieve. This means it’s not all about setting business goals… it’s about meeting them! MEETING business goals without compromising service is where your success comes from.

In order to be a powerful force within your industry you must be focused on the next level of growth. In order to achieve that consecutive level of success you must be able to not only meet and achieve your business objectives but you must also be able to do so while maintaining the quality of service your customers or clients are accustomed to. You will need to focus on the tasks that are necessary to make that happen. This is one of many places that virtual assistant services come in!

The tasks that are NOT necessary to meet your business goals are no longer profitable for you to complete on your own and need to be outsourced to your virtual assistant. Not knowing when to delegate tasks can be more costly for your business than you may think. If you were to figure your hourly wage you will usually find that your time holds a much greater value than the hourly wages you pay your virtual assistant who in a sense acts as a partner in the success of your business. Never forget, your time is also money and for the most part it costs you MORE to do it yourself!

Another important factor to consider when it comes to how virtual assistants help you achieve your goals is time. Time is so important because you can either be spending more money in time lost doing certain tasks yourself, OR even worse. You could actually not be getting many tasks done because there just isn’t enough time! You can never reach your business goals without being able to get things done!

Your assistant essentially acts as a reliable source in supporting the backbone of your business. Their directly correlates to the success of your business. If you are not successful the virtual assistant won’t be successful. The more your business grows and you meet your business goals, the more work there is for the virtual assistant. The busier you are with your thriving and lucrative business, the more you need the virtual assistant. The assistant survives on the success of their clients!

If you hire the right assistant then you have someone who is highly concerned with the success of your business and has probably worked with other business owners within your industry. They are able to assist you in creating your goals, assessing them, and achieving them. Virtual assistants also have their own networks they are a part of. They have access to other assistants who have skills they don’t have. Your virtual assistant is not only able to help you in their specific skill sets. You never want to underestimate the value of this access and support. Although you may be creative and an expert in many ways, more heads are always better than one. Imagine how far you could go when you always have fresh, new, and innovative ideas for growth from your outsourced team.