Despite challenging macroeconomic factors, some small businesses logged over 20% growth last year in both revenues and profits, according to new research from the Business Development Bank of Canada (BDC).
By comparison, Canada’s economy is expected to have grown at a rate of about 1.5% in 2015. The high-growth distinction that only applies to 12% of the approximately one million small to medium-sized businesses that operate in Canada, according to the study, titled “SMEs and Growth: Challenges and Winning Strategies.”
The financial institution surveyed this elite cohort for insights into the strategies that helped them achieve growth. Pierre ClÃ©roux, vice-president of research and chief economist at the BDC, explains what these companies are prioritizing.
Build your own talent pool
As baby boomers vacate their jobs, the slack in the labour market is beginning to tighten. For every two people retiring from the work force, there is only one person to replace them, Cleroux says. “And that’s with immigration,” he adds.
Entrepreneurs are starting to take notice.One of the most surprising findings of the study according to ClÃ©roux is that Canada’s top entrepreneurs are beginning to talk more about training their employees. “We never heard them talk about that before,” he says.
The fastest-growing businesses are also looking for low-cost measures to make their employees happy. ClÃ©roux says that includes things like recognition, dialogue and communication initiatives, flexible schedules, and team activities. The new reality of the labour force are nudging small business owners to adopt the mindset of the many tech companies vying for millennial talent.
Stay on top of your game
Many small businesses who operate outside of tech believe their businesses can’t be innovative. They’re mistaken, says ClÃ©roux. He offers a new definition: “Innovation is improving what you already do well.”
Being innovative doesn’t have to entail launching a brand new product every year—most business owners are too busy to come up with completely novel ideas. Instead, concentrate on improving your company’s processes incrementally by setting short-term goals. “To be successful today you have to improve all the time,” says Cleroux.
Invest to be the best
The fastest-growing countries in Canada understand that growth is contingent on investment, says Cleroux. Of those companies, roughly three out of four have invested in advanced technologies including automated management systems.
Adopting these technologies has made these companies more efficient. That helps sustain growth, even if it doesn’t always create growth by itself. Still, there’s hesitation from smaller players to become early-adopters. “There’s a perception that robots are not for small and mid-size firms,” says ClÃ©roux. But comparable U.S. businesses are more receptive to new technologies, such as robots for manufacturing purposes, which are coming down in price as they become more ubiquitous.
There may be a perception among Canadian entrepreneurs that being an early adopter is more of an American thing than a Canadian thing, suggests ClÃ©roux. Or it could be that many entrepreneurs learn how to do business one way and don’t see a need to change—60% of entrepreneurs in this country are over 50-years-old, he notes. But that resistance to change could cost you, so consider the return on advanced technology before dismissing it.
Be a client-centric business
It’s the first rule of business and yet ClÃ©roux says he’s surprised by how many entrepreneurs seem to neglect it. In the era of smartphones, being “client-centric” takes on new meaning. “Most people want to buy online or at least they want to look online before they buy,” he says.
BDC’s poll of all small to medium-sized business reveals that nearly 41% don’t consider building a website a high priority. “If you’re client-centric you need to be online,” says ClÃ©roux.
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Do you agree with the BDC’s recommended strategies? Which of them are you already using? Share your experiences and thoughts by commenting below