Sage Financial Literacy Survey Shows Canadian Small Businesses are Embracing Mobile Technology, but Continue to Struggle to Identify Key Costs
Sage Global Business Index finds that small businesses believe their financial performance has worsened since the economic downturn
RICHMOND, B.C. (November 6, 2012) – Coinciding with Financial Literacy Month in Canada, Sage released today findings of a survey of 300 Canadian small business owners to determine “financial literacy,” by gauging the overall perceptions, knowledge and habits of small business owners with regard to financial management, resources and compliance. Sage, a leading provider of business management software and services to more than 6 million small and midsized businesses worldwide, conducted the survey in early October, which succeeds a 2011 study also focusing on financial literacy in Canadian small businesses.
The 21-question survey reveals that while most small businesses have identified the cost that affects their business the most, nearly one-fifth (17%) continue to struggle to recognize it. Among the study participants nationwide, smaller businesses are the most susceptible to this issue. The results also show the financial performance of 46 per cent of small businesses remained stable since the economic downturn. However, more than a quarter (28%) believe it worsened.
“Our recent Sage Global Business Index survey revealed that Canadian small business owners are slowly regaining confidence in the economy and their business prospects but continue to struggle with certain aspects of the financial management and performance of their business, especially businesses with five or fewer employees as our financial literacy survey indicates,” said Nancy Harris, vice president and general manager at Sage 50 Accounting—Canadian Edition. “Sage is focused on helping small businesses continue to regain their confidence after the economic downturn by providing easy-to-use tools and solutions, such as the recently launched Sage 50 Accounting 2013—Canadian Edition, that support them to better manage their business and streamline their processes, so they can concentrate on growing their business.”
The financial literacy survey found that small business owners are relying on mobile technology to manage business-related activities. In fact, respondents reported using their mobile devices to handle emails (52%), online banking (30%) and managing their calendar (25%). However, Quebec small businesses are the least likely to use their device for business email communication, with only 38 per cent using mobile technology to do it. The devices most used are laptops (67%) and smartphones (58%), while only 18 per cent of respondents use tablets for business purposes.
Although small businesses recognize the need to know more about financial planning (67%), tax payments (65%) and cash flow (58%), they are becoming slightly more comfortable with the business activities they reported being a weakness last year. In fact, respondents are less likely to find dealing with taxes (34% versus 53%), managing sales and marketing (19% versus 27%) and managing business finances (15% versus 26%) as an area of weakness.
Other highlights of the financial literacy survey include:
- Small business owners cited employee compensation (22%), marketing and advertising (12%) and capital expenditures (12%) as the costs with the largest impact on their businesses. Interestingly, however, the most impactful cost for Alberta businesses is capital expenditures (31%).
- Forty-nine per cent of respondents reported cash flow as the most important aspect of the financial management of their business, followed by invoicing (47%) and managing costs (35%). Invoicing has increased in importance over the last year, when 37 per cent of small business owners cited it as one of the most important aspects of their business’ success.
- Surprisingly, as opposed to 2011, when smaller businesses were more likely to point to managing costs as an important task, this year larger businesses are more likely to report the importance of that activity.
- The majority of respondents said they perform their business’ financial management tasks themselves, including invoicing (78%), payroll (58%), inventory management (55%) and accounting (52%). Accounting, followed by payroll, is the financial task most likely to be outsourced (34% and 9%).
- An overwhelming majority of respondents (71%) rely on accountants or consultants for advice, followed by government information (31%) and other people in the same industry (30%).
- When it comes to learning to manage business finances, 73 per cent of respondents are self-taught; 41 per cent learned from an accountant, a consultant or a bookkeeper; 29 per cent received formal full time education. Quebec business owners are less likely to have learned from a professional (29%).
- Small business owners who use accounting software are more likely to be more financially literate than those who do not (90% versus 72%).
The survey was conducted October 1-4, 2012, and its results have a margin of error of plus or minus 5%, 19 times out of 20.
Sage is a leading global supplier of business management software and services for small and midsized businesses. The Sage Group plc, formed in 1981, was floated on the London Stock Exchange in 1989 and now employs more than 12,600 people and supports more than 6 million customers worldwide. For more information about Sage in North America, please visit the company website at NA.Sage.com. Follow Sage North America on Facebook, Facebook.com/SageNorthAmerica, and Twitter, Twitter.com/SageNAmerica.
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