Having served SMEs for more than two decades, certain recurring themes have emerged. Here, we delve into some of the challenges SMEs encounter and offer insights on how to address them.
Limited Resources:
SMEs typically have fewer financial and human resources compared to larger enterprises, making it challenging to compete effectively. So outsource if you can. Our virtual world might surprise you on what can be done with some great automation or actually by someone else.
Cash Flow Management:
Maintaining a healthy cash flow is often a struggle for SMEs, especially when dealing with irregular income, late payments, or unexpected expenses. If your Bookkeeper / Accountant is not showing you hints to get this sorted, quite frankly get a new one.
Marketing and Branding:
Unless you have come from this background you probably suck at your own marketing and promotion. I will personally admit to this being one of the first tasks I outsources. So this is definitely one to put on the board to be either fully or at least partially outsourced ASAP. (Let me know if you want a good referral.)
Access to Finance:
Australian Banks most likely will not give your business any sort of loan until you have at least 2 years financials. So if you're just starting out, where does the money come from? The accountant in me says it comes from wherever you planned in your business plan …. but in reality for start ups it is usually the business owners savings or a personal credit card.
High Operating Costs:
The cost of living is out of control in Australia at the moment so if you are are a SME you are probably being squeezed on your rent, fuel and staff expenses (as in wages). So the rent and fuel costs are the best reason in my book to have a look at your business and see if you can operate from home? Cut down on everything, how about paper and the printer, that will get you paperless quicker.
If you're not sure, then chat to me about doing an expenses report to see where your costs are and how you can cut down.
Regulatory Compliance:
Because Australia has our 3 levels of Government - SME’s operate under Local Councils, State legislation and Federal Legislation - keeping abreast on compliance can be daunting. So get some good people in your corner. Bookkeepers need to complete CPD each year if they are a BAS agent. So leverage that to start off with. I also subscribe to ATO and FWA email lists, just to give me a heads up when something has changed.
Skill Shortages:
Finding good employees is worse than trying to find a rental in the Perth metropolitan area. So gain leverage strengths, use your relationships and networks to recruit if you have to recruit. You know it is hard out there so try and retain what you have by adding some easy incentives such as adding a monthly lunch voucher or being generous with leave requests. You may need to talk to your employees about what they want instead of just assuming. A lot of the time it is about more than just a pay rise.
Market Saturation:
Some sectors of the Australian economy, such as retail and hospitality, are highly saturated, making it difficult for SMEs to stand out and attract customers amidst intense competition. For example setting up a cafe in Melbourne. So find a niche, a great location or a great experience to help your business.
Chat to your marketing person for some ideas, and chat to to me about doing some reports to see what areas of your business are performing the best.
Climate Change and Natural Disasters:
Australian SMEs are vulnerable to the impacts of climate change and natural disasters, including bushfires, floods, and droughts, which can disrupt supply chains, damage infrastructure, and affect business operations in things like operations or as in your staff probably might also be “unavailable”. So plan for the unexpected, check your Insurance Policies regularly, train some back up staff, and have a first aid kit.
