Running a business doesn’t come cheap. Hiring stellar talent, investing in the right tech tools, and marketing your brand all have a direct impact on your bottom line.
The financial challenges faced by entrepreneurs can vary based on your location. A recent survey from GoDaddy found that, in Canada, small business owners primarily grapple with access to capital.
“[Small businesses] want to get started quickly, they want affordability, and they appreciate having easily available support and guidance along the way.”Young Lee, GoDaddy
The cost of doing business in Canada is rising, and compounding this problem is a wave of hidden costs that often elude initial budgeting and catch entrepreneurs and small businesses by surprise. As Young Lee, Canada market and growth lead at GoDaddy puts it, “Canadian small businesses are stretched thinner than ever, particularly when it comes to their finances.”
As business costs continue to rise, Lee talked to BetaKit about how Canadian small business owners can keep expenses in check.
The hidden costs of running a business
The journey for any new business begins with a crucial yet often-dreaded task: figuring out the funds needed to keep the wheels turning. According to Lee, a budget involves not just estimating immediate expenses, like salaries or utilities, but also forecasting future needs and potential unforeseen costs.
“The most difficult part when you’re setting up a business is trying to project your cash flow when you haven’t yet had enough time in the market to validate your demand for your product or services,” Lee explained.
So what are those elusive costs contributing to the problem? According to Lee, they often take the form of small, pesky fees that accumulate over time. Think payment or transaction fees when accepting credit cards, increased interest rates on loans, service expenses, or legal fees. This issue is particularly felt by Canadian businesses, since Canada has some of the world’s highest interchange fees, a fact the federal government is trying to change.
According to a 2023 study by the Business Development Bank of Canada, 65 percent of Canadian companies reported feeling squeezed by the surging cost of running a business. For this reason, Lee advises small business owners to “overestimate your start-up budget so that you’re prepared in any scenario.”
For GoDaddy, this is a linchpin issue, and it’s why the company just rolled out its connected commerce solution in Canada. The platform offers entrepreneurs and small businesses the opportunity to sell online and in-person, accept payments quickly and securely, and manage sales all in one place.
Included in the Canadian launch is GoDaddy Payments, which is backed by the lowest transaction rates compared to other leading providers like Square, Stripe, and Shopify. With GoDaddy, small businesses can currently save over 15 percent in transaction fees. The payment processing tool is complimented by GoDaddy’s portable Point-of-Sale Smart Terminal featuring a built-in payment processor, scanner, printer, security, and more.
Canadian businesses can also expect integrated selling features with the launch, and a comprehensive suite of tools to accept online or remote payments without requiring a website or online store.
“With GoDaddy Commerce solutions and POS Smart Terminal now available across Canada, small business owners now have a smarter way to sell while keeping more of what they earn in their pocket,” Lee said.
Marketing’s uphill battle is growing steeper
Getting a good picture of your operating costs is just the beginning. Equally challenging for Canadian small businesses is navigating the ever-growing complexity of online marketing.
GoDaddy’s survey revealed that marketing ranks among the top three challenges for Canadian SMBs. Marketing was not only the primary focus for initial investments for these businesses but also continues to be the area where recent investments are concentrated.
Thanks to shifting customer preferences, the challenging learning curve for new technologies, and intense online competition, marketing is becoming an increasingly difficult and costly endeavour for small businesses.
Lee pointed out that Canadian business owners can benefit from social media, as it allows brands to quickly iterate and fine-tune their marketing strategies. “Social media can be an incredibly powerful tool for engaging with your customers,” Lee added.
But as Lee notes, platforms are constantly evolving. GoDaddy offers integrated digital marketing tools such as content creation for social channel promotions as well as online resources, such as blogs, help articles, videos and tutorials, to help businesses build an online presence.
Navigating the capital crunch
Amid escalating inflation and surging interest rates, businesses are facing unprecedented hurdles in accessing capital. At the same time, Canada’s aging population is leading to a noticeable dip in new ventures, adding another layer of complexity to the already challenging economic landscape.
Lee advises businesses just starting out to focus on keeping costs they can control low. As the business expands, it can then explore how its sales cycles, inventory management, and marketing initiatives influence operational costs.
“By keeping a close watch on managing your budget by closely monitoring operating costs, you can help to minimize risk by being able to plan or adjust your budget accordingly,” Lee added.
Having a strong base of over one million domain customers in Canada, GoDaddy’s connected commerce solution and GoDaddy’s POS Smart Terminal, now available to Canadian small businesses, was described by Lee as another step toward meeting the everyday needs of entrepreneurs.
“[Small businesses] want to get started quickly, they want affordability, and they appreciate having easily available support and guidance along the way.”