There are about 1.1 million businesses operating in Australia. Small business represents about 87% of these businesses. The effect of these is that they provide about 60% of private employment and over 40% of the gross Domestic Product.
Small Business is also a leader in innovation and currently the major growth sector in employment growth.
The owner’s role in small business often is marketing, selling, manufacturing or delivering the product /service. The view often is that if we can make it and sell it, then all will be well.
Nothing could be further from the truth.
Records show that most small business failures are attributable to poor management, usually poor financial management.
The main financial problems are:-
- Failure to plan properly before the start
- Failure to monitor the financial position
- Failure to manage cash flow
- Failure to plan and manage expansion
- Failure to borrow properly
- Lack of continuous financial control
The challenge of all small business operators is to gain and maintain control of their business. This includes recognition of the symptoms, take action to follow them back to the causes and to develop and implement corrective action.
Financial management is not a quick-fix, it is a journey through processes that have as their objective improving profit and the small business operator’s wealth.