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14th June 2011

Amex Study Shows Canadian Small Business Owners Choose to Go It Alone

american express canadaCanadian small business owners say they are spending a lot of time sweating the small stuff when they could be focusing on the big picture of how to grow. According to the quarterly American Express Small Business Monitor, entrepreneurs recognize planning, hiring, and marketing as key business functions but admit to spending a big part of their day on tasks such as office administration, cleaning and repairs. It would appear a big part of Canada’s business backbone is caught between planning for success and maintaining the status quo.

More than half (59%) of respondents to the latest survey, conducted by Angus Reid Public Opinion, say their business would be in a much better position if they could spend more time doing what they’re good at. Specifically, small business owners say more than a quarter (26%) of every day is focused on activities they don’t consider core to their business. Almost half (48%) report that they can’t concentrate on growing their business because they are spending too much time running it, and many remain reluctant to hire outside help to share the workload.

“We know small business owners put their heart and soul into everything they do, so a reluctance to rely on others is only natural,” said Eric Nielsen, Vice President & General Manager, Small Business Services Canada, American Express Canada. “But looking for outside help for even a few tasks can allow owners to focus on the work they love and the reason for starting their own business in the first place.”

Exactly what non-core tasks are small business owners taking on themselves? Findings show owners are spending valuable time on such tasks as secretarial work (49%), technical support (48%), office/property repairs and cleaning (40%), and doing their own website construction (30%), rather than hiring outside help. Control is a key consideration for them: 56 per cent don’t want to give up control over any aspect of their business, even if it means doing everything themselves.

It’s not that small business owners don’t recognize the dilemma: 38 per cent of respondents say they waste a lot of time doing things that other people would be more qualified to do. Nevertheless, they are reluctant to outsource for a number of reasons, including a desire to maintain quality (38%), and the time it takes to hire and manage outsourced contractors (24%). The single greatest factor, though, is that outsourcing is seen by more than half (52%) as too expensive.

Certainly, controlling costs is a paramount concern, particularly as small business owners are starting out. But while cash may be the most precious resource for start-ups, time may become more of a factor as a business matures.

“There’s a sweet spot for outsourcing between the time when you are too busy to do everything yourself and when it makes sense to hire someone fulltime,” Nielsen said. “And the nature of outsourcing makes it easy to bring that function back in-house when the time is right to hire.”

Almost three-in-five (59%) have actually hired help for at least one task in the last six months, according to the survey results. The tasks most frequently outsourced were only those that required very specialized knowledge:

  • Business taxes (37%)
  • Website construction/maintenance (35%)
  • Technical support (32%)

Of those who have embraced outsourcing, the main reason cited is the recognition that other people are more qualified to do the work (34%), compared with 22 per cent who say their time is best spent focusing on things they do best.

“We may see owners become more willing to outsource some tasks as they move towards a goal of business expansion rather than maintaining the status quo,” Nielsen said. “Hiring a third-party is not only low risk but can fill a temporary need for business-critical skills.”

Small business owners are indeed working harder to find more time and the funds to get outside help, which may be in preparation for ambitious plans to come. The American Express Small Business Index shows that more small business owners identified growth as their main priority over the next six months than in the previous quarter (up three points since last quarter to 31 per cent). Additionally, respondents said they are more willing to take risks: those willing to take significant or above average risks in the next six months climbed to 22 per cent, up six points.

Those small moves may reflect a confidence that the economy is leveling out, if not yet improving overall.

A third (33%) of respondents are seeing an improvement in their business, while 38 per cent are still experiencing a downturn. Both figures are little changed. Those respondents who are hopeful that business will get better also remains unchanged this quarter from January at 47 per cent, with another 28 per cent not expecting any change to their businesses’ financial position.

Small, cumulative changes have pushed the Index up a single point from January 2011 to 66 per cent or “C”, matching the levels seen one year ago.

“We saw in previous quarters, small business owners were awaiting signs of recovery before making any moves, Nielsen added. “We’re now seeing them test the waters with a greater appetite for risk and in some instances, gearing up for growth plans with outside help. If the trend continues, we should see some interesting activities during the rest of the year.”

From April 15 to April 21, 2011 Angus Reid Public Opinion conducted an online survey among a randomly selected, representative sample of 570 Canadian small business owners with 2-100 employees. The margin of error for the total sample is ± 4.0 per cent, 19 times out of 20. The results have been statistically weighted according to the Statistics Canada Business Register’s most current business size and region statistics to ensure a representative sample of the entire population of small business owners in Canada. Discrepancies in or between totals are due to rounding.

This entry was posted on Tuesday, June 14th, 2011 at 9:00 am and is filed under Business News, National News, Research Studies. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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