Did you recognize that the World Bank has determined NZ to be the most accessible country to start a business?
NZ is a poster child for entrepreneurship, but many Kiwi business owners find the months or years after they’ve started their business to be more complicated than the initial launch phase.
The stats tell the full story. Kiwis start 8000 small businesses a year. 97% of companies in this country are classed as small businesses, meaning that they have 1-19 employees. Unfortunately, only half of these small businesses survive beyond the five-year mark. This is because small business owners face some severe challenges when venturing out on their own.
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Did you know that only 50 percent of New Zealand’s small businesses were cash flow positive in the past year? Also, 20% of Kiwi small business owners admit that they’ve come close to the market due to severe cash flow issues.
This is because cash flow is the lifeblood of any business. We know this because small business owners overwhelmingly say that it is the main reason that they will seek finance. So what strategies can small business employers to get and stay out of the red?
Understand your cash flow variables
If you understand the peaks and troughs of your cash flow, you can get on top of your finances and hopefully dodge any financial catastrophes.
If you don’t have any accounting know-how, you can always use accounting software. It can help you see and understand how your cash flow is tracking. It can also assist in detecting the products, areas of business, and seasonal changes impacting your business the most.
Your new cash flow plan will help you avoid any nasty surprises. It will help you identify if and where you need to cut back on expenses or splurge a little more on anything. It would help if you also prepared for seasonal ups and downs, tax payments, and one-off costs.
Check your overheads
Overheads are ongoing expenses that aren’t directly related to products or services such as utilities, insurance, taxes, and salaries. Many small business owners find that they can cut down on their overheads without significantly affecting the quality of their products and services.
Interrogating any smaller business costs such as subscriptions, insurance, and supplier expenses can help you find ways to save money – they all add up. You might try getting competitive quotes on a semi-regular basis and surprise yourself with what you can save!
Small business owners have been trading in a radically altered business landscape due to COVID-19. Many have seen reduced income.
You can call your providers and landlord to see if they can offer you a better rate. Often you’ll find that they can. You only needed to ask. Many Kiwi small business owners also find that they are paying hundreds if not thousands too much on their business insurance. You can compare multiple quotes from some of NZ’s leading business insurers by visiting BizCover New Zealand.
Pay your invoices promptly and issue clear invoices.
Small business owners pay their bills eight days late. This causes various problems, all of which can be avoided by directly paying the bills on time.
You can do your clients a favorably being upfront about your payment terms, clearly outlining all necessary details and ensuring that you’re sending them promptly.
Consider making an invoicing schedule that you can stick to. Your invoicing program should include scheduled reminders, so customers are prompted ahead of the due date. Some simple automation will save you a lot of time and free up your hours spent on other business operations.
Get creative with your marketing.
According to Prospa, small business owners say that investing in their marketing is the most important investment that they can make for their business. They say that a new marketing campaign trumps hiring new staff, buying new equipment or bringing out a new product.
To maximize the success of your campaign, but might want to experiment with different strategies and monitor results before you commit to a full plan or campaign.
A successful marketing experiment also uses specific, measurable goals.
You can do a little bit of test marketing before you commit to a campaign. Consider selling products on a limited basis, even before you’ve done a full product launch. You can also test run different online channels such as electronic direct messaging (EDM) and then look at the metrics to see which ones increase sales and enhance customer engagement.
Customer feedback is another excellent resource to utilize! One of the incentives of actuality a small business is that you can only reach out to your clients. It’s also a great way to involve your clients directly.