Poor cash flow is hurting small businesses right across the New England region as the end of financial year fast approaches.
Higher costs continue to be an issue, with bills for things such as insurance, energy and government charges taking longer for businesses to pay, while at the same time the money coming in has generally slowed.
The problem is not isolated to a single sector either but widespread, with small business in both large centres such as Armidale and smaller communities like Glen Innes affected.
Regional director at NSW Business for New England North West, Diane Gray, says that cash flow has been tight throughout the region, though there are some differences between towns when tackling the problem.
“A bigger centre such as Tamworth has access to more resourcing that can help get through some of those challenges quicker,” Gray said.
“Obviously because they have better transport and logistics options out of Tamworth than you may out of Glen Innes, for example, there’s a difference.”
Agricultural businesses which make up the largest sector in New England have been further impacted by disrupted supply chains caused by bad weather.
In these instances the problems of negative cashflow are very hard to solve. In others, answers might be more closely related to the books.
Financial planner and founder of Lifesolver Financial in Armidale, Matt Meehan says cashflow issues often stem from questions of costs versus income at the outset.
“Some people set up cafes and restaurants with a bit of a romantic attachment,” Meehan said. “They soon realise how much hard work it is and how hard it is to make money.
“While your costs are going up, sometimes it can be difficult to increase your own prices, depending on your market. Also you might not have control over what you can actually charge.”
This can “compress” a business and hurt its ability to turn a profit, he says. However, there are some basics that can help.
“Knowing your numbers is important,” Meehan said. “In the farming space, for example, it’s about using debt wisely. You can increase the scale of your business with leverage.
“Often a lot of the problems can be solved by increasing the topline, which is your revenue. It’s about finding ways to do this.”
“Then, a lot of people don’t necessarily market their business. So smart marketing can help and that can often be about having a niche that you work with.”
Meehan says that having this type of focus makes it a lot easier for people to recognise what your business does, whereas a generalist can find it more difficult.
While no two businesses are the same of course, there are shared experiences for many across the region.
Gray says some of the more common issues are the cost of insurance, rent or any other fixed costs which have spiked due to inflation.
“Just as the cost of living has increased, so has the cost of doing business,” Gray said. “Energy is another significant one and so are wages. They impact businesses no matter what the size.”
Although when a business gets to a certain size and needs to pay payroll tax, the burden increases, Gray adds.
“There are added costs of training new people, as well as the cost of travel. So there are logistical costs when you’re out in regional areas,” she said.
Related to this is that new employees are not always available.
Gray says that in some industries such as hospitality, the owner might not even open their doors because of staff shortages – an issue for many businesses across the region.
To help bridge a few of the gaps, some businesses are using technology to become both innovative and broaden their reach.
Meehan notes the success of Armidale-based cattle weighing business, Optiweigh, which is having success both locally and overseas.
“If you can find a niche and address a problem like that technology does, you can do really well,” Meehan said.
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