Innovation

Small business owners unprepared for a slump

Written by Jim McElgunn

A poll of small business owners for BMO Bank of Montreal shows that most are so optimistic about the Canadian economy they haven’t even bothered to develop a contingency plan for a downturn.

Harris/Decima surveyed owners of Canadian firms with 1 to 49 employees and annual revenue of less than $5 million. The poll, conducted in late February, reveals that entrepreneurs remain bullish about the economic outlook: 70% of the 777 respondents describe the Canadian economy as “good,” while 9% describe it as “excellent.”

Business owners are so confident that most admit they haven’t made any preparations for bad times. Almost two-thirds say they have no contingency plan in place in the event of an economic downturn.

“While it’s encouraging to see such optimism among small business owners, a contingency plan should be of paramount importance, particularly in times of economic volatility,” says Gail Cocker, BMO’s senior vice-president commercial banking. “From our experience, the best time to develop and review contingency plans is during good times, rather than scrambling to adjust during a sudden downturn.”

Respondents from Western Canada were the most likely to say that the Canadian economy is in good or excellent shape—no surprise given the rapid growth in the region. But they were also more likely to have a contingency plan than small business owners in the rest of Canada, with almost half the western respondents reporting they have one.

Originally appeared on PROFITguide.com