29/05/2013 - 15:56

Take charge of your business future

29/05/2013 - 15:56

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Small business owners are used to ‘doing it all’, but sometimes a bit of independent advice can be the difference between success and failure.

Take charge of your business future

We have all heard the term ‘too big to fail’, particularly during the GFC when many banks and financiers were adjudged to fall into this category. However no-one uses this term when speaking of the majority of business enterprises in Australia.

The small-to-medium business sector in Australia is facing some of its toughest challenges of the past two decades – consumer spending is down, rents are up, workplace red tape is on the rise, and banks continue to treat SMEs with caution.

According to a recent report by National Australia Bank, SMEs in Australia are the largest employers and the largest contributors to GDP. The small business sector generates about 34 per cent of private industry value added, and 48 per cent of private sector employment. Ninety-eight percent of all businesses in Australia are SMEs and they provide private sector jobs for nearly 4.8 million Australians.

To me, this would appear to be a classic case of too big to fail. But don’t expect this undercapitalised, over-regulated and sometimes-overlooked contributor to the economy to get a government bailout.

Small business owners are more likely to get a visit from one of the growing contingent of administrators and receivers developing strong business models throughout Australia.

It is up to us to work through the issues, however; to find the solutions and make our voices heard. Don’t just stand there and bemoan the state of the economy and the health of your business. Take matters into your own hands and take back control.

The first step is to understand what you don’t know. Get independent advice about the health of your business.

Don’t just check that your finance is competitive or that the rent is within expectations; look at all aspects of your operation.

These include but are not limited to:

• supplier agreements and pricing;

• creditor terms and discounts;

• product mix;

• pricing methodology;

• marketing and advertising effectiveness;

• staff productivity and rostering;

• cost and usefulness of debt products;

• EFTPOS and transactional pricing including internet;

• relevance and sustainability of your business now and into the future;

• quality and timeliness of accounting, business and tax advice;

• rent negotiations and alternatives that may include downsizing or relocating;

• reassessment of long-term personal and business goals; and

• growth opportunities and government support available.

These are just a few ways that an owner can reassess their business and take back control of their future at a time when many of their peers are failing.

However if you are already concerned that your business has some serious issues or the first signs of such, then there are steps that you can take. The first is to appoint someone independent to complete a pre-administration assessment of the business. Some accounting firms and consultancy companies that specialise in all aspects of SME operations can help here.

It is important to act quickly and assess where the issues are and, if possible, take remedial action to stem any losses within the business. The assessments and investigation need to be extensive and need to be directed to the priority areas first.

There will be steps that can be taken immediately which may involve closures, asset sales, financial assistance or an injection of capital from owners. And then there will be steps that will be handled over a longer term to ensure the ongoing viability of the business.

The chances of a successful outcome will lift exponentially if people who understand your business and who are working in your best interests (not appointed by a creditor or financier) are in charge of this process.

 

Paul Rowe is managing director of The Business Squad.

Paul@thebusinesssquad.com.au

      

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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