How to overcome the same issues that keep SMEs up at night

How to overcome the same issues that keep SMEs up at night

5 min read

It’s no secret that running a business can be a stressful experience, but too much stress can negatively impact your work performance, not to mention snowball.

A recent reader survey conducted by Money in Business found several issues keep SME owners and managers up at night. From cash flow to immeasurable ROI on projects, business professionals have a lot on their plate. If you can identify the issues keeping you up at night, you can work on finding solutions. Here are some of the key issues SME owners and managers are facing:

Cash flow

Without money flowing in, staff and suppliers can’t be paid, bills can’t be met, and a profit can’t be made; so it’s no surprise that cash flow is a major concern for business owners. In fact, of those surveyed, a staggering 47.2% of respondents claimed that cash flow keeps them up at night. We suggest minimising cash flow worries with these easy steps:

Create (and maintain) a cash flow forecast (need help creating a cash flow forecast?)
Don’t be afraid to seek external business and financial advice, in fact, it’s recommended
Agree on the payment terms before providing a product or service
Keep on top of invoices – it is not a sale until you have received payment

Funding organisational growth plans

If only money grew on trees. Funding growth plans concerned 20.8% of SMEs surveyed, which is understandable seeing it can be the difference between staying small or making it big. A SWOT analysis can help evaluate any current strengths or areas for improvement such as increasing staff retention and motivation. It can also help you explore new opportunities which may attract investment or be required for extending your line of credit.

Reducing debtor days

If you’re of the 20% of respondents who claim reducing debtor days is keeping you up at night, you can do something about it. There are several ways of reducing debtor days. Firstly, it pays to be upfront from the start and request shorter payment terms before commencing the relationship. Ensure you send invoices out as soon as possible, or better still arrange automated payment collection – this will save you and your customer time and best ensure payments are made on time, every time. Debtor days can also be reduced by offering other payment methods that suit your customer – for example, online, over the phone, or BPAY may be preferred. Different customers have different needs. Where practical, offering the easiest payment solution for your customer will best ensure you are paid as soon as possible.

Dealing with banks

Dealing with banks kept 6.8%% of respondents up at night. Having a clear growth strategy and transparent cash flow forecast is critical to working with your bank for additional funding. If you find it difficult to contact the right person in your bank, find alternative providers that can offer the same service. Getting paid on time shouldn’t be hindered by your bank’s internal processes and customer service deficiencies.

Immeasurable ROI on projects

Return on investment (ROI) or measuring the return on money invested, was flagged by 5.2% of SMEs in the survey.

Calculating ROI can be difficult in retrospect. So consider how you will calculate ROI at the outset. If you haven’t got the right data, use a proxy and get stakeholders to agree on the proxy and method of getting better data in the future. Doing this early will help you realise that measuring ROI is not as difficult as it seems. For example, trade show marketing is one example where people find the ROI difficult to measure. However there are a number of ways in which ROI can be measure. For example, sales leads can be measured by the number of qualified leads; awareness can be measured by the number of attendees and number of press mentions; and the introduction of a new product can be measured by the number of samples ordered and the number of qualified leads that the product generated.

Rest easy

Yes, running a business can be a stressful experience but once you identify the issues keeping you up at night, you may be surprised to learn that there are several ways to tackle them.

Every business deserves to be paid on time, in the simplest way possible. So if calculating cash flow is your priority, try our cash flow calculator or this guide on developing a cash flow forecast.