Alberta biz owners tapping savings, neglecting debt to stay afloat: report

More than half (56%) of business owners are actively taking steps to improve their working capital, according to the latest issue of ATB Financial Business Beat.

In a release, ATB Financial says regardless of a company’s size or industry sector, working capital is needed to “meet short-term commitments and provide capital for growth.”

It adds, “A business may need to increase its working capital to meet a sudden increase in market demands or — as is the case for many Alberta businesses — to fund day-to-day operations during times when business markets are on economic standby.”

Indeed, one challenge for 26% of business owners in Alberta is the current state of the province’s economy; it’s negatively impacting their working capital.

So how are they dealing with this? Respondents cited varied strategies for growing their working capital, says ATB. While 43% said they’re minimizing staffing levels, 41% are trying to stay competitive by introducing more favourable terms into their negotiations. Only 26% of those who had taken steps to boost working capital cited expansion and/or company growth, says ATB.

One troubling issue is more than a quarter of business owners (31%) said they’ve used their personal savings to supplement working capital needs, “while 20% have chosen to postpone payments on principal debt to keep cash flow available,” says ATB.

What’s more, says ATB, “while most small business owners (69%) rated themselves high in their understanding of working capital, 30% rated their comprehension as moderate to low.” And, “Twenty-nine per cent indicated they have never sought professional advice about managing working capital […].”

ATB Financial’s findings are based on business owner trends in Alberta, but they still highlight the value of checking in with your business-owning clients. When times are tough, offer educational resources and planning support.

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