Small and medium-sized enterprises (SME) are actually big business in Canada. Nearly 99% of all registered Canadian companies employ fewer than 500 people, which makes the SME sector by far the biggest contributor to Canada’s economy. These companies are a vital part of the national economy and the source of most of the innovation in Canada, as hundreds of thousands of small operators discover new technologies and ways of doing business that have the potential to change the face of Canada’s post-industrial economy.

This sector is not without its challenges, though. Specific issues revolving around hiring, borrowing, and collecting debts, in particular, have been of special concern to Canadian small businesses for decades. Your SME may have to come up with its own way to overcome them and grow.

Starting a Canadian Small Business

Canada makes starting a small business fairly easy, since all you have to do is file for incorporation in your province and register for the Harmonized Sales Tax, Goods and Services Tax and Provincial Sales Tax. This process normally takes just a few days, at which point you can open your doors and start doing business.

The first real challenge is likely to appear when you start operations. Construction permits, for example, take an average of 250 days to win approval in Canada. It takes even longer in Quebec, where a special permit is required. If you work in construction, or your business has to build something before you can get started, you may have to budget an extra nine unprofitable months before you can break ground for the first time.

Hiring Low-Skilled and Unskilled Workers

Canada’s population is short on young adult workers. As a result, there’s a surplus of middle-aged and older workers, while younger and lower skilled workers are more difficult to find. Immigration takes some pressure off this issue, but something like one-third of Canadian small businesses admit they have trouble hiring the low- and unskilled labour force that they need.

This labour pinch affects industries in different ways. Your construction company, for example, probably needs a lot of manual workers with no particular skill set to lift and carry, clean up and cart out material. Your software consulting company, on the other hand, isn’t in such great need of unskilled workers other than perhaps a cleaning crew. Whatever industry you’re in, it might be worth hiring unskilled workers through an employment agency that focuses on these service needs. If you take the route of standard “Help wanted” ads instead, at least allow your small business extra time to find good people.

Borrowing to Expand

Once you’ve overcome the startup hurdles and have been in operation for a few years, you may think about expanding. When you’re ready, finding the financing you need to expand effectively can be a challenge in Canada. Many Canadian small businesses have taken to borrowing startup and expansion capital from lenders in the United States, while others turn to government borrowing assistance to get financing from a Canadian bank.

Resources such as the Canadian Small Business Financing Program (CSBFP) can be a life preserver when your SME needs money, especially if you don’t have stellar credit or a long, distinguished borrowing history. This program is not, in the strictest sense, a government benefit. Rather, it’s a federal government-facilitated deal between your business and a lender that might otherwise require extra paperwork or collateral to approve your loan. The program can also potentially speed up your approval process, at least on the lender’s end, because of the pre-screening process your business has to pass before the loan can go through.

Say you run a roofing business, and a lot of your customers are asking about other services you may have thought of offering, such as siding work, gutters, and paving. Your roofing business is likely to need money to pursue this expansion of your services, though. Asking to borrow $250,000 for new trucks, professional training, and the necessary equipment may result in your being turned away by lenders, since you may have no security for your loan. With a guarantee from the CSBFP, a participating lender can be sure that their risk is covered and may therefore be more likely to issue the loan. Even if your business qualifies for traditional bank financing, a government guarantee could cut your interest rate by several points, making your small business loan easier to pay back and putting you in the black sooner than you otherwise would be.

Collecting Debts and Enforcing Contracts

Contract enforcement is a common small business challenge facing Canadian SMEs. According to the World Bank’s 2017 report , the average delinquent contract in Canada takes 910 days to be resolved, which is significantly longer than even the 570 days it took in 2003. In the United States, the equivalent figure is just 420 days. This payment gap has real-world consequences for your small business. If the success of your small business depends on a limited number of sizable contracts, trouble with a single one of them could be a greater risk than your business is equipped to handle. It’s a very rare Canadian small business that can afford to spend three years in and out of court before it gets paid, and the costs associated with collections can be very high even if you win.

In a continuing effort to be scrupulously fair to every party, the Canadian court system routinely grants extensions, continuances, and miscellaneous delays to any party who asks for them. In addition, multiple avenues are available for delinquent clients or partners in breach of contract to divert or delay the payment and resolution process.

Say you run a consulting firm. If it’s just you and a handful of employees, a single million-dollar contract promises years of financial security. You could wind up devoting all of your efforts to that one client, only to find yourself in deep financial trouble when they dispute an item on your invoice or if you find out they’ve been publishing your work without attribution. The sheer wall of time and expense you’re looking at to fight this to the end in court could make it worthwhile to settle for far less than is due, just to put the matter behind you and move on.

Fortunately, there are things you can do to help your small business get through this potentially grueling process in one piece. Downloading and using reliable contract management software , for example, helps you keep your obligations straight and well-organized. Keeping your contracts in the cloud in a standard format with all the necessary sections and clauses filled in helps you create and manage written agreements that are clear, easy to understand and apply, and easy to enforce. Good software management is no guarantee that all your clients observe your contracts or that you can sail through court when there’s a dispute, but such a system can help avoid a breach of contract in the first place, as well as helping you to prove your case if it comes to litigation later on.

Canadian small businesses operate in the midst of several challenges. More than 5.6 million customers overcome these challenges with QuickBooks. Join them today to help your business thrive.