Every headline seems to be doom and gloom at present. Job losses here, belt tightening there. And while the Reserve Bank would have us believe that inflation is getting under control, we now are faced with something (maybe) more insidious – shrinkflation. Shrinking chocolate bars? Grim.
Slight sarcasm aside, the underlying data is a little more mixed. In fact, the Xero Small Business Insights report actually highlights some (very slightly) improving data. On the other side of the fence, in the month of March, 3,680 people made withdrawals from their Kiwisaver under hardship provisions. To be clear, we’re not suggesting that the economy is tanking, or that it’s about to take off. But we are clear that the state of the economy (and the nation) is seldom as bad – or as good – as the headlines would have us believe. What’s more, while it’s clear that some people are under financial duress, this isn’t evenly spread.
If you’re in a small business, what should you be doing? There is a near endless supply of advice available on the internet around this subject – some of it quite good. From our observations, here are some things that you should absolutely be addressing:
- Understand your cashflow: what does it cost you to ‘keep the doors open’? How much needs to hit your bank account each week or month to keep your bases covered? Do you have a contingency in case a big invoice doesn’t get paid on time?
- Manage your receivables: this is very much connected to understanding your cashflow. Who owes you money and when are they going to pay? Don’t be like these guys.
- Know what your super-power is: you can’t compete based on size, but that means that you can be nimbler. A great example – have you tried to get hold of a big business lately? Did you go through an awful, automated phone system only to spend half an hour on hold? Or perhaps ended up arguing with a chatbot – perhaps your small business could use customer service as its super-power.
In summary, don’t let the doom and gloom headlines get you down, but equally, it’s a sensible time to be paying close attention to business metrics as well as thinking about what makes your business unique.
Not sure about your cash position? Get in touch.