A recent national poll of 350 small businesses in Canada has revealed that their owners have three main worries: acquiring new customers, maintaining current customers, and managing cash flow.
Published in the first-ever Lendified Canadian Small Business Index (The Lendified Index), the poll also found that seven in 10 small businesses were either not growing or in decline. As well, 48 per cent of business owners either rely on their personal lines of credit or use them regularly to manage cash flow.
The Lendified Index is published by Lendified.com, an online lender that is wholly focused on lending working capital to small businesses in Canada.
“Small business owners are the heart and soul of the Canadian economy,” said Troy Wright, founder and CEO of Lendified.com. “We created The Lendified Index to help us better understand their needs, their worries, and how to best support them. Of note, The Lendified Index measures the likelihood of small businesses to hire more staff in the next year. As it stands now, 17 per cent of small businesses intend to hire over that period.”
The Lendified Index is the result of polling Canadian small businesses with fewer than 20 employees. Online interviews were conducted between September 18 and 19, using Vision Critical’s B2B Aeroplan Panel. André Turcotte, Ph.D., Associate Professor at Carleton University’s School of Journalism and Communications University, managed the project.
Wright said, “As it relates to business financing, the polling results clearly highlight the fast pace at which small business people need to operate their business. Their personal credit cards are the most easily accessible – if expensive – way to maintain cash flow when operating at that speed. And in the case of a business loan from a bank, it can take up to eight weeks if a business qualifies. That’s far too slow to meet the cash flow and management needs of a small business operator.”
The key findings show that small businesses in Canada are:
- Facing significant challenges; more than seven in 10 small businesses are not growing – 38 per cent with no growth and 31 per cent are declining or struggling.
- Worried about growth and money; the single greatest concerns of small business people, in order, are acquiring new customers, managing cash flow, and paying taxes. Businesses with less than $50,000 in annual revenue and more than $500,000 have the greatest worries about cash flow.
- Using their personal credit cards to finance their business. More than any other form of credit, small business people use their personal credit cards to manage their day-to-day business needs. Seven per cent of small business people are “maxed out” on their personal credit cards. Forty-three per cent have three or more credit cards. Those in business less than five years are more likely to use credit and be at their credit maximum.
- Using all forms of credit available to manage their business; the order of preference for sources or credit are: personal credit card (48 per cent); business credit card (32 per cent); personal line of credit (23 per cent), business line of credit (21 per cent); and creditor other than a bank (four per cent).
- Maintaining current staffing levels; only 17 per cent of small business people intend to hire new staff this year, with 81 per cent maintaining current staffing levels. Just three per cent intend to lay off staff.
- If growing, it is mostly in startup companies; smaller businesses with less revenue and shorter times in business are more likely to be growing.
Lendified is located in Toronto. It is accepting loan applications, online, from small businesses across Canada.
