CIBC Poll: Advice from successful small business owners to start-ups: keep focused on clients, cash flow
CIBC Poll reveals Canadian business owners in the start-up-phase are focused on obstacles beyond their control, while not keeping a sharp focus on their finances
TORONTO, Sept. 27, 2012 /CNW/ - A new CIBC (TSX: CM) (NYSE: CM) poll conducted by Leger Marketing reveals that while almost all business owners agree that attracting clients is key to their success, new business owners may be too focused on issues outside of their control such as the economy. 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 per cent)
- Fluctuations in cash flow (42 per cent)
- Having access to adequate capital/financing (40 per cent)
Comparatively, while newer small business owners also listed attracting or retaining customers as the most common obstacle they must overcome to be successful (52 per cent), they follow with:
- Economic uncertainty (40 per cent)
- Strong competition from other businesses in their industry (36 per cent).
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 per cent) 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," noted Mr. 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."
CIBC offers the following tips to new business owners to help them establish a strong financial foundation:
| 1. | Prepare your business to deal with the ups and downs of cash flow by understanding and anticipating your day to day cash needs. A well-prepared and regularly updated business plan helps with this. | |||
| 2. | Talk to your Business Banking relationship manager about the range of flexible tools and services that are available to help you manage your cash effectively and allow you to monitor your financial information whenever and wherever you need to. | |||
| 3. | Plan for rainy days and ensure you have financing available to tide you over through short term gaps in cash flow. Don't wait for the rainy day to arrive before you apply for financing. | |||
| 4. | When seeking financing, it's a good idea to determine ahead of time what investors and financial institutions will be looking for when deciding to invest in your business. Again, a well-prepared financial plan with accurate and thorough financial statements can help you get the financing you need. |
KEY POLL FINDINGS
Top three obstacles identified by small business owners, by business age:
2-5 years (newer businesses)
| Attracting or retaining customers | 52% |
| Economic uncertainty | 40% |
| Strong Competition | 36% |
6 - 10 years (established business)
| Attracting or retaining customers | 58% |
| Fluctuations in cash flow | 42% |
| Having adequate access to capital/financing | 40% |
This 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, 2012. Final data were weighted by business size in order to obtain a representative sample of Canadian businesses. A probabilistic sample of 801 businesses would yield a margin of error of +/- 3.46%, 19 times out of 20.
CIBC is a leading North American financial institution with nearly 11 million personal banking and business clients. CIBC offers a full range of products and services through its comprehensive electronic banking network, branches and offices across Canada, and has offices in the United States and around the world. You can find other news releases and information about CIBC in our Press Centre on our corporate website at www.cibc.com.
SOURCE: CIBC
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