Intuit Finds Small Business Owners Understand the Importance of Financial Literacy, but Want More Help and Tools

MISSISSAUGA, ON, Jan. 16, 2013 /CNW/ - When it comes to finance, most Canadian small businesses know they need help. Those are among the results of a new survey and financial literacy quiz conducted on behalf of Intuit Canada, which reveals that 83 per cent of Canadian small businesses face a serious financial literacy skills gap.

To learn more about the financial literacy levels of Canadian small businesses, Intuit Canada commissioned Angus Reid Public Opinion to conduct a 10-question quiz among entrepreneurs. Among the questions: What is the role of the balance sheet? How can short-term cash-flow be improved?

Only a few scored highly:

• Two per cent achieved a score of great: (9 - 10 correct).
• 16 per cent achieved a score of good: (7 - 8).
• 39 per cent achieved a score of basic: (5 - 6).
• 44 per cent achieved a score of below basic: (0 - 4).

"A large number of small business owners (83%) scored either basic or below basic on the quiz. At the same time, a majority (50%) also understand that financial management is important," said Jeff Cates, managing director of Intuit Canada. "This reveals both a serious skills gap - and a lack of access to the tools and resources that can help."

"We believe that the single most important thing we can do to help more small businesses succeed is to increase awareness about financial literacy, and make more tools and resources available," said Cates.

Root Causes

The failure rate for small businesses in Canada is alarmingly high, according to Statistics Canada. While 85 per cent make it through their first year of business, only 51 per cent survive through year five. Starting a business on sound financial footing is essential to reversing this trend.

Closing the Gap

The survey results show that Canadian small business owners know what needs to be done to start closing the knowledge and skills gap. It asked participants which activities would give them a better grasp of financial fundamentals:

• 42 per cent said they wanted to spend more time with an accountant.
• 24 per cent said they would benefit from information sessions with other small business owners.
• 22 per cent said they would benefit from online tutorials.

The survey also found that small business owners recognize the benefits from using financial literacy tools, resources, and support. In fact, small business owners who identify as having an advanced understanding of financial management are five times more likely to use software (or a solution provided by an accountant) instead of manual methods, such as pen and paper:

• 76 per cent of small businesses using financial software, or a solution provided by their accountant, feel confident that they have an advanced knowledge of accounting principles.
• Only 16 per cent of small businesses using outdated manual methods, such as pen and paper, feel that same level of confidence.

A Shared Responsibility

"By working together, we can boost financial literacy and make more small business success possible," said Cates. "The federal government's efforts, including last November's Financial Literacy Month and the legislation to create the Financial Literacy Leader, will bring a new focus to this issue. This will help to better coordinate the efforts of government, business and non-governmental organizations to raise the level of financial literacy among small businesses and entrepreneurs - an objective that Intuit strongly supports."

The survey results also drew support from third party groups:

"Thousands of Canadians go into business each year, not because they are financial gurus, but because of other talents or opportunities," said Dan Kelly, president of the Canadian Federation of Independent Business. "Many quickly learn of the massive demands on their time and attention - particularly in dealing with red tape, taxation and finance.  While many entrepreneurs have terrific business instincts, they can become even more successful if they take the time to improve their financial literacy."

"Entrepreneurs, and high-growth businesses are the engine of growth and the backbone of the Canadian economy - they create value and jobs that sustain our quality of life," said Victoria Lennox, Co-founder and CEO of Startup Canada. "As an entrepreneur-led grassroots network of entrepreneurs across Canada, Startup Canada welcomes the results of Intuit's study. If we are to support our entrepreneurs in building bigger, better businesses, faster, then we must address this gap and ensure that Canadian entrepreneurs have access to tools and support to enhance their financial literacy for success."

"Intuit's findings underscore just how vital it is to foster financial literacy among entrepreneurs to ensure that more small businesses can survive and succeed in Canada," said Tessa Mintz, vice president, volunteers and programs for the Canadian Youth Business Foundation (CYBF).

"We know first-hand how valuable it is for young and emerging entrepreneurs to seek the support they need to be successful in the long run, especially in the vulnerable start-up stage. The good news is that support is available through organizations like CYBF, including access to pre-launch coaching, business resources, start-up financing and mentoring to help them launch and sustain a successful business," said Mintz.

For more information, including a report and infographic, please visit: blog.intuit.ca

About the Financial Literacy Survey and Quiz

From Nov. 27 -29, Angus Reid Public Opinion conducted an online survey and quiz on behalf of Intuit Canada. All respondents were small business owners with 100 or fewer employees and have been in business for at least one year. Participants were recruited through the Angus Reid Forum Small Business Panel. A national sample of 501 small business owners  completed the survey and quiz. For the survey, the margin of error on a sample of this size is plus or minus 4.4 per cent, 19 times out of 20.

About Intuit Canada

Intuit Canada ULC is a leading provider of business, financial and tax management solutions for small- and mid-sized businesses, consumers and accounting professionals. Its flagship products and services, including Quicken®, QuickBooks®, QuickBooks® Enterprise Solutions, SuccèsPME, TurboTax, and ImpôtRapideMC, simplify personal finance, accounting software and tax preparation and filing.

Additional offerings include ProFile®, a professional tax preparation software suite, the QuickBooks ProAdvisor Program and the Intuit Developer Network for professional users and developers. All are provided by Intuit Canada or through its partners. Intuit Canada has employees across Canada and offices in Edmonton, AB, and Mississauga, ON. Intuit Canada is an affiliate of Intuit Inc., which trades on the Nasdaq market under the symbol INTU.

Stay up to speed with QuickBooks in Canada on Twitter (@quickbooksCa), or like us on Facebook (facebook/QuickBooksCanada).

About Angus Reid Public Opinion

Angus Reid Public Opinion - the public affairs practice of Vision Critical - is a North American full-service polling and market research firm which is a leader in the use of the Internet and rich media technology to collect high-quality, in-depth insights for a wide array of clients. Dr. Angus Reid and the Angus Reid Public Opinion team are pioneers in online research methodologies, and have been conducting online surveys since 1995. With offices in Vancouver, Toronto, Ottawa, San Francisco, Chicago, New York, London, Paris and Sydney, its team of specialists provide solutions across every type and sector of research.