They say money makes the world go round. For the most part, the phrase is true. But to say just big money turns the wheel is wrong. Small businesses and their owners make up 40% of the Canadian GDP and employ 60% of all Canadians. From small bakeries to the rise of online shops, small business is the backbone of our Canadian economy.
There is, then, great value in small businesses growing sustainably and servicing their local market. Post-pandemic, this could not be clearer, with small businesses being vital in helping maintain our communities’ economic health and robust local supply chains.
And, as such, they deserve our concerted focus, attention, and support.
Unfortunately, despite small businesses’ power in the GDP, their lifespan is often short. As put by StatCan, “failure rates among entrants [small businesses] are incredibly high. Some 40% have exited by their second birthday, and about 75% die by their eighth birthday. On average, the mean survival time is about six years, while the median length of life is approximately three years.”
Pretty grim. We can (and should) do better by more effectively addressing the challenges of Canadian small business owners. Doing so will increase our GDP, grow our local economies, and reduce greenhouse emissions.
But, as with most things, we first need to fully understand the problems before we can look for solutions.
So what are the real challenges? Is it big business? Lack of staff? Funds?
To delve into specifics, I had the pleasure of interviewing 3 small business owners in Toronto from very different sectors (textiles, notary, and cryptocurrency mining) and asked them about their challenges.
What differentiates a small business from a large business?
The short answer to this question is the lack of available resources. Two out of the three business owners I interviewed are solopreneurs – comprising 100% of their companies’ personnel. The many hats these business owners have to wear include: business planning, purchasing inventory, bookkeeping, marketing, customer service, business development, and all required labour-based tasks. It’s a lot. And forces them to become a ‘Jack of all trades.’
But even if an owner is great at doing all of these things, there are only 24 hours in day. With all these roles, responsibilities and tasks, business owners often have to make a choice. Have lower productivity (often at the risk of business survival) or give up time with friends, family, and themselves.
The choice between the “grind” or yourself is not easy. Especially if you are a single parent and have mouths to feed. With mounting bills, it is not surprising many prioritize productivity over their physical and mental health requirements. This study here proves it, with many small business owners suffering from depression, anxiety and high stress.
By comparison, a larger franchised or established business can avoid dealing with this dilemma. It can simply pay the wages of a team of employees to maintain a high productivity rate by splitting the division of labour.
All three of our Toronto small business owners interviewees are also desperate to split the division of labour ASAP. And how do you do that? Cash to hire help – which is simply not available.
As with so many things, the answer is simple but the solution isn’t easily accessible for most small business owners.
How has the lack of funding affected your small business?
A lack of funding affects all small businesses – of course. But it is wrong to assume this problem affects all owners the same way.
For example, textile-related small business owners struggle with getting their feet on the ground and developing supply chains with their suppliers often being halfway around the world. After all, having sample materials shipped is a costly (and long) process, especially on a start-up budget. They often have to take calculated risks, minimize the size of the samples of clothing they ship, and just hope that they will not have to repeat the same costly process with a new supplier.
With the other two small business owners, a lack of funding contributed to a lack of hiring. In Toronto, a minimum living wage is $22, and to afford that, for even just one employee, is a far stretch for an owner who may even struggle to pay themselves.
What were some of the roadblocks you faced when you started your own small business?
100% of the start-up money of these Toronto small business owners came straight from their own pockets.
Considering that all three of the people I interviewed own small businesses in a city with our nation’s highest property costs, investing a large sum of personal money in a business that may not succeed is a particularly high risk.
The cryptocurrency mining business owner shared a picture of their current place of operations – putting their lack of available resources on full display. Lots of servers in an unfinished shed. Works great, but not ideal for client meetings. Thankfully, with this business being largely virtual, that hasn’t impacted their growth. So sticking with bare-bones functionality works for them.
When money is in short supply and property is at record high costs, allocating funds towards a comfortable, aesthetically pleasing workplace is a relatively poor investment. So making do with what you have for as long as you can makes good business sense.
Where do you get support from as a small business owner?
For our Toronto small business owners, most of their initial clients were family and friends in the city.
In the case of the textile business, it was easy for the people close to them to invest in their business and buy clothing from them instead of a large franchise. These initial clients wearing the new brand’s clothes served as free advertising, which lead to more people buying.
However, reaching out to clientele outside of their family and friends’ networks only went so far. To grow their business, they needed other marketing channels to reach new audiences.
What are small business owners doing to market and promote their businesses?
Given their limited available resources, it’s to be expected that most, if not all, small businesses in Toronto could not afford to put out advertisements on television or even bus stops. So instead, all 3 of my interviewees promoted their brands through an affordable and commonly used means of getting the word out about their businesses: social media
One reason why our Toronto small business owner interviewees relied heavily on social media, could be that they are all Gen Z.
Social media is already a large part of their lives and, as such, they do not need much technical guidance in using it. On top of this, social media promotion is not only a quick way to communicate to the general public, it is also an easy way for people to communicate with the business. Whether this is questions, comments, concerns, or unbridled support, all are welcome and easily accessible through the comments on posts or private messaging.
But, while social media is easily accessible, being able to use it efficiently and reach your ideal clients is challenging. In fact this is one of the main reasons we created vLife: because finding the space to reach a local market when larger corporations increasingly dominate the online space, is really hard.
Growing your business presence on social media isn’t always easy but it can help. And, because we know small business owners still spend a lot of time trying to leverage social media marketing, we but together some doable online marketing tips for small business owners to help.
How can we best support small business owners?
One of the best ways to help small business owners, in addition to buying from them, is to share how much you love them with your networks.
Word-of-mouth and referrals is still one of the most effective forms of marketing as it establishes immediate trust. So leave positive reviews of your fav small businesses on Google. Post about them on socials and tell everyone you know how awesome they are!
We often romanticize the idea of owning a small business. How it can be freeing to work on your own time without having to adhere to your own schedule. All the independence that comes with it. The potential for exponential financial growth and expansion when liberated from working 9-5 for someone else.
It’s not that these things aren’t true, but it’s not the whole story.
We rarely talk about the problems that come with being a small business owner: the lack of available resources, the fact that everything has to be done by you (especially in the beginning), and the considerable mental toll this all takes – which is why we greatly appreciate our small Toronto interviewees spending time with us to help us better understand their challenges.
We know, as a vLife reader, you are already determined to support local small businesses.
We’ve noticed more and more people in our communities joining the buy-local movement. Perhaps together, we can help level the playing field for small business owners so that the challenges discussed here are more effectively addressed in future.
In the meantime, by continuing to prioritize buying from local small businesses when you can, you are helping in so many ways. And for that, we sincerely thank you.