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.
In this series, we will break down the common problems encountered by Canadian business owners and prescribe tactics to address these challenges. The first articles in this series will cover the most and least challenging business functions, while 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 are the core business functions that keep your doors open and need to be performed on a day-to-day basis. If you’re the owner of a barbershop your core functions would include:
-Marketing (bring new customers into your store)
2) Secondary Functions are the 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 majority of the business’ activities happen at a brick and mortar location. However, technology can be leveraged to grow the business and improve retention with existing customers. Examples of technology used by a barbershop could be a website with a reservation tool and/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 — i.e. Sales and Marketing, Accounting, Operations, Human Resources, Management and Technology. Respondents were asked to score from 0 to 10 — 0 being ”it’s challenging” to 10 being “we know what we’re doing”.
Most challenging business functions for business owners in Canada:
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
Sales and Marketing 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, while businesses that sold to consumers and other businesses (B2B + B2C) scored this function as 6.1 / 10.
Accounting 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.
Least Challenging business functions:
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. However, 41% of business leaders disclosed that making time for long-term planning was the biggest challenge in the Management function.
Although the study found that 35% of business leaders struggle with finding, recruiting and retaining skilled workers, it was revealed that Operations are the second least challenging business function and obtained an average score of 7.1 / 10.
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.