Cashflow issues hurting small businesses

The focus of small business concerns is shifting ahead of a make or break Christmas trading period.

Profitability is the top issue for small business in Western Australia, and for those in accomodation and hospitality.

Cashflow is the biggest concern for four out of 10 small and medium sized business owners, but challenges around profitability and the cost of doing business are increasingly keeping them awake at night.

Despite a challenging environment, NAB Economics’ SME Business Insights report for the September quarter highlighted easing concerns around government policies, work-life balance and fuel prices, which were providing some relief to small businesses.

Small businesses also benefited from the recent Black Friday and Cyber Monday sales with NAB merchant data revealing spending over the weekend was 23 per cent higher than on a normal, equivalent weekend and retailers, cosmetic stores, jewellery and watch stores, bars, pubs and restaurants seeing more sales.

NAB Business Direct and Small Business executive Krissie Jones said the latest NAB Economics data from a survey of 600 SMEs (small and medium sized Enterprises) echoed what she’s been hearing when meeting with business owners across the country.

“Small business owners are incredibly resilient, but they’re already stretched and continue to face persistent and emerging challenges that are keeping them up at night,” she said.

The report found cashflow was the primary concern for small businesses in Victoria (43 per cent) and NSW (38 per cent) with those in construction, retail, transport and storage, and property services sectors most affected.

Staff turnover and labour shortages are the most significant challenges for small businesses in Tasmania (44 per cent), South Australia (43 per cent) and Queensland (39 per cent) and those in business services and health services.

Profitability is the top issue for small businesses in Western Australia (41 per cent) and those in accommodation and hospitality.

The survey pinpointed inflation and the cost of doing business as the biggest issues for wholesalers while government policies and regulation are the biggest concerns for SMEs in finance and insurance.

Data researcher Alares latest monthly Credit Risk Insights found insolvencies remained at all-time monthly highs and were 70 per cent above historical (pre-Covid) numbers, while Small Business Restructuring accounted for about 20 per cent of all new appointments.

Ms Jones said while the survey revealed some good news small business owners were not confident in the long term.

“While improving work-life balance and easing concerns around government policy are welcome, small business owners tell me these measures can shift quickly, which is why it’s critical to reduce red tape,” she said.

“Small business owners remain alive to ongoing risks around cashflow, profitability and access to capital, as well as hiring and retaining staff, which are greater concerns in smaller states and regional areas.”