Wednesday, October 20, 2004

Staying single is part of success in small business

A story published today in the Ottawa Citizen reports that a study published by the Calgary Business Information Center (CBIC) indicates that small business owners are more likely to succeed and prosper if they are not married.

Being educated and being single -- but not divorced, widowed or separated -- are among the keys to operating a small business successfully, a new report suggests.

The report by CIBC -- Secrets to Small Business Success -- examined those who have outperformed their peers in revenue growth over the past three years to identify some of the characteristics of successful entrepreneurship.

Having a big ego helps, according to the report based on a survey of small companies for the bank by polling firm Decima Research.

"Canadian entrepreneurs take ownership of their success," said CIBC senior vice-president Rob Paterson, noting more than 90 per cent agreed that "the most important factor in the success of my business is me."

Firms that tend to be more successful also have owners who have at least some post-secondary education, and are single.

Single entrepreneurs over the three years have experienced almost double the revenue growth of married entrepreneurs --48.3 per cent compared with 26 per cent -- the report notes. Those who are divorced, separated or widowed experienced only 17.9-per-cent growth, or only one-third of what single entrepreneurs enjoyed.

"While the finding that single people have experienced comparatively larger revenue growth may indicate that single people have more time to devote to their businesses, this finding may also be correlated with the age of the entrepreneur and the stage of the business, among other things," it added.

Small firms run by individuals with at least some post-secondary education also enjoyed revenue growth that, at 31.8 per cent, was more than double the 12.3 per cent posted by businesses run by individuals with less than high school education.

In contrast to an owner's marital status or education, factors such as gender, being born outside of Canada, having a home-based business or being forced into self-employment did not appear to have any significant impact on revenue growth.

But there are numerous other keys to small-business success, the report suggests, including the use of outside advisers, performing outsourced work for larger firms, becoming incorporated, using the Internet and using the web to export.

Entrepreneurs who, on a regular basis, use the advice of professional advisors saw revenues rise 76 per cent more than those who didn't obtain such advice.

The survey also showed that incorporate small firms posted revenue growth that was 40 per cent higher than those that weren't.

Small businesses that received outsourced work had revenue growth 61 per cent higher those that didn't.

And firms that used the World Wide Web to do business saw their revenues jump more than 40 per cent, or more than twice as much as firms that weren't connected to the Internet.

Further, those that not only sold on the Internet, but exported more than half of those sales, experienced revenue growth that -- at a searing 81.2 per cent -- was 2 1/2 times that of those companies that exported less than half of their Internet-based sales.

The survey of 1,829 small business owners with no more than 15 employees and revenues of less than $5 million a year was conducted in July.

The results are considered accurate reflection of Canada's small firms within 2.3 percentage points, 19 times out of 20.

The CIBC-sponsored survey found that both financial and non-financial motives prompted individuals to become entrepreneurs.

The leading non-financial reason to starting a business was "to do something I love." That was cited by 42 per cent of the respondents, followed by the desire for "more flexibility," cited by 21 per cent.

The top financial reason, cited by 27 per cent, was the "loss of a job/change in employment" followed by the need for more income, cited by 13 per cent.