According to the RBA, around half of all Australian firms only had enough cash on hand to cover one month of expenses prior to the pandemic.
Large and publicly listed companies had much larger cash buffers than smaller businesses, on average holding more than three times as much cash. Larger companies were also more likely to have access to significant credit lines.
As COVID-related financial support from the government diminishes, and supply and employment challenges increase, it is unsurprising that SMEs are now struggling.
So, what practical steps can you take to turn your business around?
“When business owners experience hardship, the default reflex is often to self-diagnose the issue and select a vendor to execute a pre-defined ‘solution’. When in survival mode, this can seem like the most logical approach to getting your business back on track, however, it’s often the opposite. You wouldn’t go to a doctor only to guess what the problem is and tell them what medicine you need, so don’t do the same thing in the instance of your business.
“The key to survival will vary between each business depending on the industry and surrounding circumstances, there is no cookie cutter approach. So, what can you do to survive? Be willing to solicit an industry expert to talk about the issues your business is experiencing and the solutions to remedy it. Acknowledge that you’re the expert on your offering but not in the field where you’re experiencing trouble. This understanding is how the most prosperous partnerships are formed.”
- Andrew Cornale, Co-Founder and Digital Experience Director, UnDigital