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There's a saying: "make new friends, but keep the old. One is silver, the other gold."
Chintzy, right?
If you're a small business owner, however, there's an enormous grain of truth in this statement. Consider this: your business invests in marketing and outreach in order to bring a steady flow of customers through the door, helping to create relationships that last over time. Yet, sometimes, there's such a thing as a customer that costs you money.
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Time and time again at the Merchant blog, we've pressed the idea that accounting for seasonality should be one of the most important elements in any small business' financial plan. What is your business' strategy to overcome periods of low activity, whether in your industry or in the wider economy in times of slowdown or recession? If you can't answer this question, your day-to-day operations and cash flow management may be under serious threat in the event of unexpected lulls.
And yet, the idea of a "recession-proof" business lingers in the minds of many entrepreneurs and business owners, especially those starting new businesses or taking over the operation of those in industries or markets that they believe possess the ability to remain stable and profitable no matter the changing tides of the economy at large. Does such an industry exist? Can any business be said to be truly recession-proof?
Research has shown that one of the industries most often labelled "recession-proof" is the business of pet-related goods and services. As I write this, my own cat is comfortably couched in one of his favourite spots, and I cannot deny the consistency with which my attention has led me to go in search of items to meet his needs. Statistics back this assertion up: in a 2011 report, marketing agency Mintel found that people's pet-related altruism can be a major economic decision-driver.

“Despite the difficult economy, 50% of pet owners make unplanned toy and treat purchases for their pets and another 16% say they have cut back on extra household expenses in order to afford pet-related care…showing the true commitment of pet-parents.”

In fact, from 2008 to 2011, the pet industry in the USA increased its yearly revenue by $10 billion. It is an industry with a significant population of large-scale chain retailers, but also one in which specialty products and luxury-oriented services driven by small businesses have emerged and maintained profitability.

Is this kitty recession-proof?

The author's assistant into research on the pet industry.


Having made note of this rather remarkable example, we must consider the ways in which other businesses may insulate themselves against economic downturn or seasonal decline in customer traffic. The maintenance of supplier, customer, tenant-landlord and other relationships must be maintained throughout these periods, and businesses should not have to stretch their spending into excessive credit to cover the slow portion of the year. Owners should be cognizant of the periods in which their cash management needs to be prioritized. Alternative financing models truly show their value in this regard, having developed methods that can help businesses of all kinds retain access to working capital without negative consequences during off-peak times of year or when faced with adverse economic trends.

Part of what makes small businesses unique is their ability to manage so many of the aspects of their mandate in-house, with creative and directional control in the hands of the owners. Despite this, the dream of operating in a bigger league, expanding to serve or reach an ever-greater audience, is high on the list of desires for many small business owners. Scaling a small business is a delicate decision: some businesses scale better than others, and the adjustments needed to increase your scale also introduce a higher than average degree of risk, depending on the size of your ambitions.
scaling a small business: What is this? A process for ants?
If you're thinking of scaling your small business, consider the following advice to make the transition as stable, profitable and free of interruption as possible.

Much of the scaling-up process is conducted through mergers or collaborations between companies. However, a straight-ahead merger or acquisition is not always the most desirable option for a business from a variety of standpoints, including management and cash flow. You might also consider entering into a distribution agreement that sees your products' market expanding in exchange for minimal additional risk: alternatively, there is also the option to find a licensee with whom you may diversify the growth of some particular piece of your business' intellectual property.

To be adequately prepared to scale up your business, you must first be fully in control of your current market situation. Having a full understanding and mastery over your current processes, cash flow management, and most importantly a clear set of goals, will predicate the direction and fashion in which you can scale your business. By scaling, you will aim to refine and project your core strengths as a company, while spending less time dealing with the aspects of the business that impede your process.

Emergent technological resources can help businesses bridge the gap to the larger audience they may seek. Technology allows companies of all sizes access to efficiencies that were previously only accessible to large enterprises. Consider the importance of such tools as crowdfunding and social outreach, as well as cloud-based or mobile-optimized solutions for workflow management, inventory, and communications both internal and external.

Growth puts strain on cash: that's why more businesses fail when growing than when shrinking. In light of this, having a rigorous cash flow forecast and monitoring it closely are key. You must be able to fund your growth and also minimize the disruption to your current financial plan and existing obligations that are integral to your business at its current size. Alternative lenders have stepped into the gap created by major banks and allowed more small businesses to take on the funding they need to grow and scale to new levels of profitability and exposure.
 

The turn of a new year is nearly upon us. With holiday marketing and promotional efforts likely squared away and awaiting deployment, many small businesses have the time to look back at the events of the past year and also to look forward to the next. From our perspective, here are some of the ideas and small business stories that will be making a difference in 2016.
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More than ever, digital consumers are being given the tools they have long desired that enable them to control the messages they encounter on a daily basis through the internet. Don't like a particular brand's approach to digital advertising? Hide it from your inbox or social feed. Sick of stories about Donald Trump? Exorcise mentions of his name from your browser with a specially coded extension script. For digitally savvy small businesses, the trend toward increased curatorial agency on the part of your customers will likely mean that insightful, thoughtful or story-driven sharing will take the reins of your marketing strategy. Rather than simply advertising a sale or promotion with a link and stock photo, the onus will be on businesses to connect on a human-to-human level.

2015 saw a lot of buzz in the world of mobile payment technologies: Square made aggressive expansions to its business model, while a host of app-centric payment options like Google Wallet have refined and broadened their services. Even popular text messaging services have begun integrating simple ways to transfer money between users. 2016 will likely see many 0f these technologies emerging from the beta phase and becoming part of shoppers' daily tech lexicon. Your small business need not embrace each and every one of these multitude of options, lest you be caught in a keeping-up-with-the-Joneses scenario: however, familiarize yourself with the methods your customers find the most popular and convenient. Getting on board will help your business streamline its cash management and workflow while appealing to a tech-savvy demographic.

 
While it feels like a cliche to talk about "Uberization" of many business models ("There's an Uber For That!"), it's hard to deny the appeal of on-demand and sharing-economized services among consumers. Expect challenges and changes to the regulatory environment surrounding these controversial and popular methods of delivering goods and services. Don't overlook the potential that on-demand models might hold for your business operations, either: reduction of overhead costs for logistics has been made possible by the democratization of these roles.

The Canadian populace, both in general and in terms of the makeup of its small business workforce, is aging. Among the most important predictions for small business owners will be the increased value of transition planning and the provision of financial support and services for a new generation of owners with their own expectations, priorities, desires and financial disposition. Financing models will need to be structured around the needs of this new demographic. The sale and transfer of businesses will likely become a major talking point in the next year, and business owners should educate themselves on transition planning in order to ensure that the life of their business continues into a vibrant new chapter.

With a new Canadian federal government comes the implementation of new policies - social, international, and most importantly fiscal. Among the most talked-about changes for the everyday financial consumer was Monday's announcement that the Tax Free Savings Account (TFSA) annual contribution limit would be reduced to $5,500, corresponding with a tax break on income earned between $44,701 and $89,401.
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For the owners of independent and small businesses, new government policy could also have a significant effect on financial preparedness, planning and asset management. In his outline for the new plan, the Prime Minister noted a particular objective: namely, that “Canadian-Controlled Private Corporation (CCPC) status is not used to reduce personal income tax obligations for high-income earners.”
According to a recently published paper in the Canadian Tax Journal (Policy Forum: Mountains and Molehills— Effects of the Small Business Deduction — Ted Mallet,) businesses with 20 employees or fewer bear almost three quarters of the country’s tax compliance costs, which are between $13 billion and $19 billion. Limited financing options for new small businesses also underscore the need for a preferential tax rate. "In addition, the preferential tax rate helps offset Canada’s high tax and compliance costs for new and small businesses,” Mallett notes.
The change to small business taxation has a direct relationship with one of the most important challenges facing small and medium-sized firms: namely, finding appropriate sources of funding and financing, especially when circumstances such as size or length of time in operation do not allow for a business to seek out loans from major banks. Easing the burden of taxation on businesses can be seen as an offsetting measure against the difficulty of finding financial support: in light of this, the new federal government has publicly committed to reducing the small business tax rate from 11 to nine per cent by 2019.
On this subject, Mallet observes that "The vast majority of small and new ventures must rely on their own assets and to some extent those of family and acquaintances. Preservation or growth of business capital though retained earnings is really the only other source of financing—and that is generally a slow and inconsistent process." Developments in the financial technology sector, including the efforts made by Merchant Advance to bring a merchant-friendly form of access to financing to the market, supplement and assist these goals.
 

When you tell people what it is you do for a living, what do you say to them? Some people may call themselves small business owners, their own bosses, sole proprietors or entrepreneurs. The range of descriptions is almost as wide as the number of businesses you may come across in your everyday travels.
Semantically, the delineation between a "small business owner" and an "entrepreneur" might be a sticking point or a source of tension for many people in the business world. When looking for advice, support, financial products, advertising services, or even a response on the tab of your Facebook Page that lists what category you belong to, the outcomes and responses that you get when classifying yourself as one or the other of these types of businessperson can be significantly different.According to the 2015 Small Business Pulse Survey by insurance provider and financial services group The Hartford, business owners say there is a difference — and they don't all want to be called the same thing. The Hartford surveyed 751 owners, partners and principals of small companies (fewer than 100 employees) and discovered that 51 percent call themselves "small business owners" and 18 percent call themselves "entrepreneurs."
Are all entrepreneurs small business owners? Are all business owners entrepreneurs?  Is it better to be one than the other? Certainly not, in all cases. Stereotypes abound: the entrepreneur as a risk-happy tech visionary with plans for the next decade, the small business as a mom and pop shop just trying to make the day to day happen with consistency and predictability. The major difference here lies not in a judgement of better or worse business acumen on the part of one or other of these character types, but in the kinds of goals and needs that tend to be ascribed to each. What makes a successful entrepreneur may not make a long-lasting small business: however, both styles of business ownership have things to learn from each other, and there are commonalities that tie them together.
Especially amid the rise of the hyper-profitable and quickly sold web startup, it is important to distinguish the entrepreneur and the small business from a financial perspective. Stereotypically speaking, entrepreneurial ventures tend to exhibit make or-break volatility in the early going. Small businesses, however, must contend with the very same volatility on a different scale. Small missed payments, minor late shipments, unexpected slowdowns in sales, or changes in certain customer or supplier relationships: these may be dismissed as bumps in the road, but they are in fact highly significant in a world where, as opposed to the entrepreneurial death knell of poor risk management, cash flow management is often the most critical factor for success.
 

The holidays are a crucial time for many small businesses: marketing plans, inventory management, shipping and staffing might each have specific requirements for the lead up to the end of the year. With so many responsibilities to manage in this time period, it’s easy to see why many businesses overlook one of the most important tenets of our various holiday traditions: that it is better to give than to receive. Charitable giving can form a pillar of your small business' community outreach.
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Charitable giving and community involvement during the holidays is not only a way for your business to establish its place as a valuable contributor to the local social and cultural landscape, but also a sound financial decision. Small businesses are a vanguard for community support in Canada:  one recent study showed that fully three-quarters of small firms make financial donations to charities or other non-profit activities in their communities, and about the same proportion donate goods and services.
Here’s how your business can benefit from some charitable activity this year:

 

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One of the things that makes small businesses unique is the amount of personal blood, sweat and tears their owners and employees are dedicated to putting in, day after day. At Merchant Advance, we know that you work hard to make your small business stand out from the crowd, to make your customers feel like they can't get the same experience anywhere else, and to compete against big-box retailers. Especially during the holiday shopping season, the originality and effort displayed by small businesses in their promotions, decoration, inventory and schedule management, social outreach, and customer service are second to none. But can you take time off from this busy schedule without compromising your business goals?
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We all know what it's like to let your personal inhibitions go a little bit during the holidays: one too many themed-sweater-related parties, one two many servings of delicious food, an excessively lavish purchase or two, and so on and so forth: dealing with the feelings of guilt that can crop up in the new year are often a challenge. One reason why many small businesses, and their employees, may feel this internal conflict arise has nothing to do with conspicuous consumption, but rather with the moral dilemma surrounding the desire to take time away from all that hard work to spend with family, friends and loved ones.
It's only natural to want to put your nose to the grindstone and make the most of this critical end-of-year push, staying open and doing more! The fear of unexpected challenges, wasting time or money drives many entrepreneurs to forgo taking time off. Statistics even back this assertion up: According to the 2013 Sage Reinvention of Small Business Study, 43 percent of small business owners are taking less vacation time than five years ago.
Despite these stats, taking a well-earned break may actually do your business some good. Doing so may allow your creativity to flourish in a new context, exposed to ideas outside of the daily ins and outs of your business management strategy. Time off allows for new perspectives on old patterns. It also helps develop employee confidence, and reinforces the trust between a business owner and his or her employees in addition to testing the ability of different people to wear different hats and take on new responsibilities. Choosing the right plan, and the right people, to take action and carry out the business' needs while you are away from the helm will show your foresight and connection to the rest of the team. Furthermore, being able to effectively schedule time off is a good exercise to prove and test your payroll system to make sure everything is in order.
Technology can also help quell the nagging feeling that things may go off the rails if you are not around to see things through. If your team uses a web-based collaboration tool such as BaseCamp,Trello, Asana or Evernote, use it to stay in the loop -- but within the boundaries you've set for yourself insofar as the use of things like mobile devices and company email. With access to these kind of tools you can troubleshoot in real time without being tied down to your brick-and-mortar location. You will soon realize that your vacation anxiety was unfounded and that your stores are running just fine in your absence.

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As the calendar year approaches its end, there's a lot on the plate of most small business owners. From preparing for the holiday push to making time for yourself and your employees' enjoyment of some hard earned time with their friends and families, it can be a busy time of year indeed. One of the items that may go neglected in the calendrical whirlwind that is year-end may be of much greater importance than you might think. Namely, the end of the year is a good time to consider conducting reviews of your business goals, marketing efforts, and employee performance. Small businesses in particular, in accordance with their increased level of operational independence and generally less complex requirements for internal accountability, ought to make a point of a structured end of year review in order to plan effectively for the next.
The success of an end of year review depends on setting out clearly defined parameters for your information. First off, define what your "body of work" constitutes. If you make widgets, the total number of widgets made might be your body of work. It could be the number of customers you served, the number of bookings you made, or every deliverable you were able to send completed to a client. Having defined this body of work, you can now apply whatever metrics are most relevant to assess its performance. This can be a personal decision driven by your business' culture: is the quality of widget, or the customer satisfaction, more important than the sales volume? How might these two be related? Which of these metrics is more meaningful in the context of your business' performance improvement? These questions will influence the data you choose to interpret and the methods by which you will learn from it.
Of course, aside from performance benchmarks, employees are the heart of every small business. What are you doing to show them they're appreciated? Take a good look at your workforce and ask yourself what you can do to help them become more engaged and more productive in 2015. Are your employees asking for more flexible schedules or more training opportunities? Would your staff benefit from an off-site retreat or team-building program? If your budget is tight and offering raises isn't a viable option, small perks like these can do a lot to make top talent feel valued in the coming year.
Your end of year review need not be a time for stress or conflict. Tailoring the process around your small business' company culture will yield results that will help your bottom line, productivity, and attitude in the year to come.

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