At Lending Loop, we’re focused on helping Small and Mid-sized Canadian Businesses (SMEs) grow. Small businesses are the backbone of the Canadian economy. In fact, SME’s account for over 99% of the total 1.1 million employer businesses operating in Canada and employ nearly 90% of Canada’s private sector workforce.
While running a business can be incredibly rewarding, it isn’t free from its share of challenges.
Let’s break down the common problems encountered by Canadian business owners and prescribe tactics to address these challenges. The first article will cover the most and least challenging business functions. Subsequent articles will outline tactics to overcome the most challenging business functions.
What are ‘Business Functions’?
Business functions are processes that are routinely performed to ensure a business’ strategy is being executed. Generally, most small businesses have to perform two main types of functions to stay profitable and relevant:
1. Primary Functions
These are the core business functions that keep your doors open and need to be performed on a day-to-day basis. For instance, if you’re the owner of a barbershop, your core functions would include:
-Marketing (bring new customers into your store)
2. Secondary Functions
These are functions that support your core business functions and add extra value to your business. Technology for a barbershop may be viewed as a secondary function since the majority of the business’ activities happen at a brick and mortar location. But technology can be leveraged to grow the business and improve retention with existing customers. For instance, the type of technology used by a barbershop could be a website with a reservation tool, or a newsletter to update clients about promotions and events.
In a recent survey conducted by the Business Development Bank of Canada, business owners from across the country were asked how they would describe their company’s comfort level with each of the six main functions of their business. These include sales and marketing, accounting, operations, human resources, management, and technology. Respondents were asked to score from 0 to 10 — 0 being ”it’s challenging” and 10 being “we know what we’re doing.”
The most challenging business functions:
Based on the survey described above, the top 3 functions business owners struggle with the most are sales and marketing, accounting and human resources.
Sales and Marketing – They were revealed to be the most challenging function. Businesses that purely sell their products and services to other businesses (B2B) scored this function as 5.6/10, but businesses that sold to consumers and other businesses (B2B + B2C) scored this function as 6.1/10.
Accounting – This is the second most challenging function for many Canadian businesses and had a score of 6.0/10. Companies with revenues of less than $500,000 find it the most challenging at 5.4/10.
Human Resources (HR) – 52% of respondents said their company is quite uncomfortable with the HR function.
The least Challenging business functions:
Management – Among the six business functions that respondents rated, it was revealed that the management function obtained the highest average score at 7.2 out of 10. But 41% of business leaders disclosed that making time for long-term planning was the biggest challenge in the management function.
Operations – The study found that 35% of business leaders struggle with finding, recruiting and retaining skilled workers. But it also revealed that operations are the second least challenging business function and obtained an average score of 7.1/10.
Technology – As an important support function, technology received an average score of 6.7/10. Product-oriented and service-based firms (7.0) revealed that they were significantly comfortable with the technology function.
If you liked this, you might also enjoy our upcoming posts from this series. Subscribe to our blog and become a regular reader.