Are You Keeping Your Business Afloat? You’re Not the Only One

Are You Keeping Your Business Afloat? You’re Not the Only One

Business is always deemed as being hard. I have never seen it that way. Challenging? Yes. Hard? No.

How we perceive something determines how we react to it. If we think business is hard it becomes hard. If we look at it as challenging, then we believe we can overcome it and win – and this drives us forward.

But one thing I will grant you. When cash becomes challenging it can become hard to manage.

It seems small businesses are struggling with cash flow. In my own business we have seen price rises not just from staff pay rises but routine costs such as electricity (this went up 50% this quarter) and IT costs (so astronomical I do not want to think about it). And I have a business with relatively low debt so for those who have business loans I can imagine the thought process.

This has meant price increases and it seems I am not the only one. Many businesses need to increase prices, or they have to work out how to provide the same service with less income. If you do that then this is likely to lead to a position where business owners need to dip into personal savings. Never a good thing.

As many of you know we are great fans of Xero, the accounting software. They recently prepared a report which surveyed small and medium-sized businesses on cash flow management. It was not great reading. Xero found there was significant financial stress on businesses due to the current economic climate.

In summary it found

  • 27% per cent of business owners have had to use personal savings to keep their businesses afloat.
  • And a whopping 34% per cent, are unable to pay themselves.
  • 26% could not pay their bills on time.
  • 40% felt their sales had stalled.
  • 60% experienced cash flow issues with 14% facing serious or significant challenges.

One of the reasons is late payments by customers. If customers pay late, it means we cannot pay our bills so our suppliers gets paid late. This means our suppliers cannot pay their suppliers on time and we have a domino effect of sustained consistent late payments. It’s a spiral that is very hard to get out of.

There’s more.

I always talk about creating daily money freedom (not having to worry about money on a day-to-day basis), financial freedom and wealth because I believe that is what most business owners want. They just don’t know how to get there.

The report basically said the same thing because:

  • 45% of small business owners were worried about their personal financial future
  • 48% are concerned about their business’s financial future.
  • And ONLY 49% were confident their businesses were on track to achieve their financial goals. 
  • 57% of business owners report feeling stress,
  • 50% have anxiety and
  • 48% trouble sleeping over the last 12 months. 
There are about 2.5 million small and medium sized businesses in Australia. Based on the above about 1.3 million business are worried about their personal and business’s financial future. And 1.29 million business owners feel stressed, have anxiety, or cannot sleep. That’s scary. Now I have not analysed the findings and I do not think Xero asked the question, but I am quite confident that those struggling don’t have a written plan, visit it often or make themselves accountable. I can almost guarantee you they do not take advice of an advisor on a regular basis. Remember cash is always king – no matter if it is good times or bad times. And when cash is good, we will spend it without a plan. It was only 2 years ago businesses were cash rich with Job keeper and Cash Boost money. Where has it all gone? Business success in terms of profits, income, and free time rarely come about because we are hopeful or because we work hard. Wealth and financial freedom are not achieved from hope or hard work either. This is a myth. Business cashflow, business success, financial freedom and wealth building come about because there is a written plan in place. That plan is executed (or changed if necessary) and there is accountability. This is what my 30 years’ experience has shown me. Its worked for me and it worked for my clients who follow the system too. If you happen to be one of the 1.3 Million business owners doing it tough out there I want to let you know it does not have to be that way. Hard work will make a difference but working smarter will make a bigger difference. It is a strategy, a plan and the execution of that plan that allows you to achieve the goal of free time, financial freedom and wealth. We have a 9-step plan to create more time, create daily financial freedom and wealth. It is the holy grail of being in business. We are so passionate about it we wrote a book on it. You can access it here.