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Challenges that SME Owners Face and How to Address Them with Numbers

SMEs are strong contributors to the Canadian economy. As of December 2021, there were 1.42 million Canadian SMEs, employing 81.1% of the total private labour force. Overall SMEs contributed 50.4% to gross domestic GDP in 2019[1].

Despite their prominence, SMEs face many challenges, illustrated by the fact that between 2015 and 2019, 101,324 SMEs were created, and 90,151 SMEs disappeared annually on average. In this article we will focus on some of the most common challenges that SMEs owners face and how they can be overcome with quantitative analysis.

Managing Finances and Funds

Nothing can hold back a business more than cashflow issues. SMEs tend to be more vulnerable than larger companies, especially if unable to pay employees and vendors, due to delayed client payments. There are several ways owners can monitor finances to ensure they have the necessary funds to run the business.

Start by creating a budget to plan for growth and monitor your financials. This could be built in Excel and include a monthly plan, forecasting income and expenses one year forward. Make sure to compare the budget forecasts against actual financials on a regular basis to stay on track.

1Statistics Canada, “Key Small Business Statistics 2022”,

It is important to make use of financial software (e.g., QuickBooks Online, FreshBooks, Xero) to automate and streamline bookkeeping and accounting processes to have a current view of payables and receivables. That kind of visibility into financials will allow owners to keep budgeting to date, will provide visibility on reducing costs by either negotiating better terms with suppliers or cutting back on unnecessary costs, and will provide more insight on efficient ways of doing business.

One extra step in monitoring your cashflow is creating a 13-week cashflow model, forecasting cash receipts less disbursements on a weekly basis for 13-weeks ahead to ensure that the cash collected from your customers is enough to cover your expenses, such as payroll, materials, subscriptions, rent, etc.

Consider outsourcing certain financial tasks, such as tax returns preparation or budgeting and modelling, to experts who can help you navigate complex financial regulations and procedures.

Finding New Customers

It is important to create a robust and sustainable sales process that would bring both stability and growth to your SME. A customer relationship management (CRM) software is an essential tool for managing customer data: to store customer information, to identify leads, to manage marketing campaigns. Some important items to track using a CRM is a count of won and lost opportunities in the month, as well as a sales funnel to provide visibility into potential new deals, their win probability, and their size. The CRM can also help manage ongoing customer relationships, by keeping track of customer satisfaction or returning customers.

Challenges that SME Owners Face and How to Address Them with Numbers
Image courtesy – canva

Balancing Growth and Quality

Closing a large client is a big win for an SME, but growth often comes with pain, and it can become difficult to manage the new client’s needs. One way to monitor growth for the business owner, is to define and keep track of their key performance indicators (KPIs) and their benchmarks values, and to make sure KPIs are maintained within reasonable limits. Some examples are making sure that there is enough capacity to do the work, that every project or job can be executed with reasonable profit margins, that the inventory and required skills are in place. All these metrics can be organized in an Excel or Power BI reporting dashboard.

Sapling Financial Consultants is a boutique consultancy helping business owners and executives to make financial decisions with clarity and confidence by building professional financial models, data analytics and KPIs dashboarding, and due diligence services tailored to their business.


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