Small businesses expected to hit financial roadblocks before 2024 - can you stay afloat?

A study by Small Business Loans Australia has found that 3 out of 4 small to medium enterprises (SMEs) are expecting to hit cash flow problems before 2024.

Reflecting the rising cost of living and consistent RBA cash rate rises, these problems with cash flow are expected to occur in a range of ways. 30% of small business owners are anticipating more difficulty collecting payments, while 26% were worried about their ability to attract sales - another 20% expressed concern about both of those factors bringing them into financial strife.

Are Aussie small business owners prepared for tough times?

After sticking it out through the changing shopping habits, supply chain troubles, and wavering consumer confidence of a global pandemic, you’d expect any small business to have strategies prepared for financial crisis.

In reality, the cumulative impact of these past few years has made it harder for many businesses to put adequate strategies in place. In fact, this study shows that 44% of small businesses do not have a plan to maintain cash flow.

With more than a third of businesses saying their cash flow expenses are upwards of $50,000 a month, this means that a lot of businesses will have to cut expenses and investments as wallets close.

At a time where investment can help a business stand out and grow effectively, this could be a real set back to customer acquisition and employee retention. 40% of small businesses surveyed said they had delayed investments, while a further 15% planned to cancel theirs.

Can a business loan help you avoid financial crisis?

Founder of Small Business Loans Australia, Alon Rajic, highlights business loans as one potential strategy for SMEs looking to keep their heads above water and grow in spite of difficult times.

“Growth often requires investment. Improving your product or service offering, getting in front of new customers, and customer loyalty will be important for many businesses who want to succeed in these times. For most, it will require financing.” says Rajic.

He notes the importance of exploring your options: “Research and loan comparisons will be important to finding the most suitable and lowest-risk loan. This may include flexibility in repayments and lower fixed interest rates.”

To get you started, we’ve pulled up some options from our database for business loans. However, as Rajic notes, “It is important for SMEs to seek advice from a licensed financial adviser before committing to a loan to ensure they can meet repayments and higher interest rates during periods of reduced cash flow.”

Read our guide on how to apply for a small business loan to find out more. If you’re looking at other modes of finance for your business, explore our hub for business credit cards.