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4 Financial challenges businesses face today

Understanding the main challenges businesses are facing today, and how to address them.

No business can operate successfully without facing the odd challenge along the way. That being said, there are a few very common financial challenges many businesses face. And while you won’t be the first, or last, to battle them, there are some ways that you can prepare yourself for when they do arise.

Here are 4 of the most common financial challenges businesses face today, and how to nip them in the bud before they become detrimental.

1. Unpaid invoices

Ensuring your invoices are paid at all, let alone on time, can be one of the most challenging parts of running a business. Not only does it impact your cash flow and make taking on big projects risky, but it adds a level of financial stress to you as a business owner.

If your cash flow is suffering to the point where you’re considering taking out a business loan, and you have capital tied up in unpaid invoices, it may be worth seeking out Australian invoice financing. Invoice financing can be a lifeline for many small businesses and larger corporations who are faced with unpaid invoices, and cash flow that needs stimulating.

Invoice financing involves a third-party facility, like Earlypay, either financing single or multiple invoices, or providing a line of credit based on your entire accounts receivables. Usually, you’ll be offered up to 80% of your outstanding payments. Once payment has been made by your customer/client, the remaining 20% will be paid to you, minus any fees or interest.

2. Eggs in one basket

Another common financial challenge a business owner can make is to rely on a small client base for the majority of its profits. The issue is, if that client were to move on, your business would suffer. Your cash flow would be severely impacted, and you may be forced to make serious cost cuts, or even struggle to pay for basic overheads, such as utilities or staff wages.

However, this problem can be easily rectified by diversifying your client base. Examine your strengths and identify areas you can build on, or look at what your competitors are offering, and if there are any gaps in your own products or services. 

Ask your clients to refer you to friends, family or other businesses – depending on your products or services. Consider putting some funds towards boosting your online presence by hiring an SEO consultant. You also may even have enough cash to put towards a new marketing campaign, whether traditional or via social media. 

3. Not knowing when to outsource

No business owner is an island. In the early days of your business it’s true that you’ll be responsible for around 100% of the work, including sales, marketing and accounts. However, as your business grows, so does the workload, and you cannot be expected to be everything at once.

One common financial challenge business owners face is not knowing when to outsource their growing workload before they burn out. Unfortunately, burn out can seriously hurt even the most successful of businesses. If you’re exhausted and overstressed, you may not make the smartest decisions for your business, or even consider giving up.

Identifying the best times to seek help is an invaluable skill in a business owner. For example, if you know that balancing the books is your most dreaded time of the month, then consider if you have enough profits to hire a CFO, or even bring a contractor on for a few days a month.

4. Holding the reins too tight

If you weren’t there for more than a few days, would your business completely fall apart? If your business is unable to operate or survive without its business owner, then you may be suffering from founder dependence.

While there are advantages of being a hands-on owner, such as strong client relationships and client experience, financially this is a huge risk. Unless you have a crystal ball, there’s no way to predict the future, and you never know when the worst may happen. Maybe you need to go on maternity/paternity leave, or even find yourself in hospital for an extended period of time?

It can be extremely challenging for business owners to let go of the reins, even just a little, as it means giving control over to partners or employees. You may need to make peace with the pace and quality of work being different than how you would do it. But facing this challenge is crucial, as you’ll have peace of mind that if something were to take you away from work, your business, and income, will still survive.

If you think that your business can benefit from Earlypay's modern invoice finance facility and would like to find out more, please contact our team today on 1300 760 205 or email us at hello@earlypay.com.au