Owning and managing a Small-Medium Enterprise (SME) is a challenge that, when it works, is exhilarating but, when it’s going badly, can equally be totally demoralising. Many businesses are started by entrepreneurs who have brought an excellent idea to the market with flair and panache, but are genuinely clueless when it comes to keeping track of the financials. Calling on the expertise of qualified accountants from the outset can be the key to setting the business on a path to success.
While running your own business can be rewarding and satisfying, there is also a dark side that hardly gets mentioned by many business owners. This is the ongoing taxation and cash flow worries that can seem to dominate many small businesses much of the time. Cash flow is the lifeblood of business and having professional advice from an accountant can help you identify obstacles in your systems where cash is being constricted. When this occurs and cash is not flowing through the bank accounts, it restricts the ability of the business to pay its suppliers or staff. Loan payments can be missed and other crucial payments, such as to the Australian Taxation Office or superannuation funds, are made late attracting financial penalties which in turn exacerbates the situation.
Some of the typical situations business owners can get themselves into include:
This can lead to debt and a lot of stress, so we’ve outlined some practical tips on improving your business.
Once you have done this, you can determine where you need to make changes to ensure a healthy cash flow for the month. The aim, of course, is to ensure your cash flow is generally neutral or positive. For instance, what spending can you cut back on, what other sources of cash are there in the business? It is important to not just rely on new sales to improve your cash position.
SMEs are the backbone of the Australian economy, taking risks with their own capital, providing employment opportunities and making a major contribution to the economy. They also face some unique challenges which can make the experience far from ideal. By following our tips, and getting expert advice at the appropriate time, small business owners can be set on a path to success and prosperity.
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