Athena Varmazis is Vice President and General Manager of Small Business Services at American Express. She recently released the results of their quarterly survey which showed that 76% of entrepreneurs believe effective cash-flow management is critical to the success of their business while 50% experienced cash-flow problems last year.

I asked her a few questions about her background and how entrepreneurs can fix their cash flow problems:

How did you become interested in the world of entrepreneurs?

I am fascinated with small businesses as they are the lifeblood of the Canadian economy. There are a reported 2.4+ million businesses in Canada and close to 98 per cent of those are small businesses. But it’s not just the number of small businesses that interests me; it’s the entrepreneurial appetite as a whole. Canadian entrepreneurs are passionate and dedicated to their visions and goals, and are becoming more and more optimistic about their business growth.

Why did American Express do this survey?

The Monitor survey is conducted on a quarterly basis to address the latest changes, challenges and trends for small businesses, and this is the 12th consecutive Monitor Amex has commissioned. The Monitor focuses on two areas:

• The first section is called the Amex Small Business Index, and examines confidence, performance and attitudes of Canadian small business owners.  This section acts as the quarterly market temperature check for business owners.

• The second section is an analysis of timely trends, issues and hot topics impacting Canadian small businesses. In the past, this section has examined everything from rising costs and expense management, outsourcing to business planning and most recently employee attraction and retention.  The focus this quarter is on cash-flow management.

The reason we continue to produce the Monitor survey is because Amex is committed to gaining ongoing insight into how Canadian businesses are faring in the marketplace and better understanding how they achieve success which in turn helps us better serve our Cardmembers.

What was the most interesting result of the survey for you?

It was interesting to see that while the economy is on the rise, the survey revealed accounts receivable was ranked as the most difficult part of managing cash-flow (49%). In 2011, the average number of days a SBO had to wait for payment was well over a month (40.2 days).

50% of entrepreneurs had cash-flow problems last year. What can they do to reduce the risk of it happening again this year?

While business owners think they are doing a good job, they do identify areas for improvement and as such, 82% of SBOs and have taken specific steps to gain greater understanding of their cash-flow.

Some of the steps business owners are taking to reduce the risk of cash-flow problems occurring again include:

• Management teams evaluating cash flow daily (11%), bi-weekly (50%) or monthly (35%)
• Almost half (44%) of SBOs project their cash flow every 3-6 months

In addition to these steps, small business owners also believe it is essential  to be directly involved in all aspects of cash-flow management.

Collecting timely payments can be a big problem as you’ve identified. Any tips for how entrepreneurs can get paid more quickly?

Canadian SBOs are implementing a number of other techniques to improve their cash-flow challenges and have found success with many of their efforts. For example:

• 49% of SBOs have accepted electronic payment
• 38% of SBOs have required deposits or staged payments

• 33% of SBOs have used a line of credit or debt vehicle

• 30% of SBOs have tried delaying payment of some accounts payable
• 29% have tried improving their inventory management

It is encouraging to see that SBOs have already taken steps to mitigate this issue. The survey also revealed they have already begun to see these tactics working.

87% of entrepreneurs are confident their businesses will grow in the next 6 months. Why do you think entrepreneurs are so upbeat?

SBOs continue to be hopeful and optimistic about the opportunities of owning their own business. The survey revealed SBOs continue to recognize issues such as cash-flow management and are willing to take the necessary steps to mitigate the problem moving forward. More importantly, they are significantly more willing to invest in new equipment or other capital expenditures. SBOs feel propelled towards future growth and have a hopeful mindset with regards to revenue, profitability and the overall financial state of their business moving forward.

Where can entrepreneurs learn more about what American Express is doing for entrepreneurs?

Our Amex for Business Canada Facebook page is a great resource which offers small business owners a way to stay up to date with the small business industry and the latest from American Express Canada. For more information please visit: http://www.facebook.com/?ref=tn_tnmn#!/AmexforBusiness