60% of small businesses will not survive the first 3 years of operation. And the Australian Securities and Investments Commission states that those who failed suffered from poor strategic management, inadequate cash flow, and trading losses.
In this video, I discuss the top challenges small business in Australia face and illustrate how you, as a business owner can manage these challenges.
Welcome back, my name is Raymond Huan and if
– own a business
-are interested in business or
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What are the common problems being faced by small businesses in Australia?
The following three are common problems faced by many small businesses today:
- Poor business planning and inadequate targeting. The Australian Securities and Investments Commission released a report that found 44 percent of businesses suffered poor strategic management.
- Cashflow management problems. Did you know that 9 in 10 SMEs say cash flow problems prevented revenue growth? There is a reason why cash is king. Small businesses need cash to run its daily operations and to expand the business. Businesses who can’t manage their cash properly—either because they use too much or don’t collect payables from clients promptly run into trouble.
- Business owner exhaustion. Did you know that 62% of small businesses don’t hire employees? This is bad news: The small business sector is very volatile, with non-employing small businesses having the lowest survival rate of all businesses in Australia—56%! I must say, however, that not having employees is a bad thing. What is worrying is when the business owner tries to do everything him- or herself. When this happens, fatigue strikes the business owner—and to the detriment of the business.
How do you overcome these challenges?
- Make a business plan: define your goals and set clear targets
Case Study: Carolyn Cresswell of Carman’s Muesli
Carolyn Cresswell started her business in 1992 when she purchased a small granola operation for $1,000. Today, Carman’s estimated annual turnover is well over $100 million. Cresswell attributes Carman’s continued success to meticulous business planning.
From the very beginning, Cresswell had a crystal clear vision of where she wanted the company to be headed—to produce wholesome products, to help protect the environment, and to keep their customers happy. To achieve this vision, she formulated well-defined goals and set clear targets for her business—the same goals and targets she continues to refer to every day for important decisions. These targets and goals, in turn, become evident in all aspects of her business—product lines, processes, and customer service.
Case Study: Emma Welsh and Tom Griffith of Emma & Tom’s
Emma Welsh and Tom Griffith turned their home office business into a national juice and snack brand. One of the top four tips for business growth is to get finances in order—this includes spending time to manage cash flow. This also means avoiding payables from piling up.
They recommend that payment terms are clearly outlined and signed off at the start of any working relationship. Griffith recommends setting clear payment terms of seven to 14 days, staying in close contact with customers and collecting payment with new deliveries whenever possible.
Case Study: Chris Strode of Invoice2go
Invoicing clients is a mundane but an extremely important task that every business must accomplish. For small businesses, it remains a challenge because it can be time-consuming. This problem is exactly what motivated Chris Strode to start his own company—and help his own small freelancing operation in the process.
As a freelance programmer who needed to invoice his own clients, Chris Strode, founder of Invoice2go, found all the existing invoicing software available too complicated and bloated with unnecessary accounting features. His immediate family, who also owned and operated small trade businesses, found invoicing a challenge as well. What he did next to solve these problems became the foundation of Invoice2go today.
Not everyone can be Strode—not everyone can make an app to help their business. But Strode’s example shows that there are solutions out there to help you run your business. If you cannot afford to hire employees, you can turn to technology to help you manage your operations. You can also outsource some of the processes of your business. Business owner exhaustion is a struggle felt by many entrepreneurs—this is why finding help is crucial not just for business survival but also for business growth.
If you are interested to know more about what a business has to go through when facing exponential growth, you can download the first chapter of the book, ”$20K to $20 Million in 2 Years” absolutely free here. The chapter talks about the differences between a good and a great business and puts out questions that make you consider how you can turn your business from good to great.