60% of businesses in Australia fold within their first three years. And in 2023, eight in ten small businesses entered administration with less than $100,000 in assets, the Australian Financial review reports. Aside from having an excellent product or service and a competitive edge, businesses need to be resilient in order to succeed. That means they’re strong enough to react and adapt to unexpected challenges and survive tough times. By managing your cash flow, investing in insurance, and looking after your employees, you’ll be better positioned to bounce back from disaster and thrive in the long term.
Keep your cash flow healthy
You need to keep an eagle on your cash flow to spot and fix any problems that arise early on. Strategically timed cash inflows and outflows put your business in a stronger financial position to meet your basic requirements and cover unexpected expenses or slow periods that happen from time to time. So do a cash flow analysis to see how much money you’re bringing in vs. how much you’re spending. If your business is running comfortably within its means, your cash flow is healthy.
If, on the other hand, it’s a challenge to make ends meet, your cash flow is negative and needs improving. 92% of Australian small businesses have at least one month of negative cash flow each year. If you’re one of them, take steps to tighten up your finances — like chase up slow paying customers, cut overhead costs, or stop overstocking your inventory, for example.
Get insured
Insurance is a valuable financial safety net that protects your business in the event of the unexpected (like lawsuits, property damage, or cyberattacks), which makes it a key feature of business resiliency. Despite this, around 13% of small businesses in Australia are uninsured. So, be sure to cover your bases and invest in insurance. General liability insurance is a great place to start. This protects your business from being liable for injury or damages that happen to people and/or property due to your day-to-day operations — for example, if a customer slips and hurts themselves on wet floors in your store, or if your delivery staff accidentally break a valuable item in a customer’s home. The level of general liability insurance that’s right for your business depends on the nature and size of your operations. An insurance expert can help you weigh your options and find the right amount of cover.
Look after your team
What with the rising cost of living and generally volatile economic landscape, times are tough right now. And any issues that affect your business can also impact your employees with worries about job security, pay cuts, and even layoffs. So although you may be tempted to skimp on wages to save money, remember that losing your best employees during a downturn will be way worse for the business than the good a slightly lower payroll percentage can do. So check your compensation packages are attractive. In addition to a competitive salary, consider offering attractive benefits that make your employee’s lives easier like paid time off, childcare assistance, and gym memberships.
If you want your business to succeed in the long term, resilience is key. By keeping your cash flow healthy, investing in insurance, and looking after your team, you can increase your chances of surviving unforeseen challenges and shocks.
