What’s Happening to Small Business in Australia
Australia’s major shopping hubs are filling up with lease signs. Whereas the country is best known for its small businesses – accounting for 97% of all businesses – shops are closing at an alarming rate. According to the figures from the Australian Bureau of Statistics, around 60% of small businesses shut down within three years of operation.
The figures are not encouraging and some thinking of starting their businesses are thrown off from their enthusiasm. However, not all businesses are headed for such doom. It pays to understand what is going wrong, forcing all these shops and businesses to close.
According to the report released by the Australian Securities and Investments Commission, based from corporate insolvencies from 2011-2012, around 44% of businesses had poor strategic management. Another 40% noted that there is high cash use with low cash flow. The remaining 33% saw trading losses.
In a report by Huffington Post, Greg Hayes from Hayes Knight Accountants & Advisers shared his insights on why small businesses in Australia fail: “One of the key reasons is that many small businesses start with a bad idea — an idea that was never going to work. But the biggest reason for failure is a lack of capital. It’s a common story that many people go into business under-capitalised and they just run out of money.”
“There’s also the issue of a lack of proper training. They get carried away with an idea but don’t think it through, they have no clear strategy and they get very much caught up in the day-to-day of what the business requires but pay little attention to long-term plans.” He added.
So what should you do if you are thinking of starting a business?
- Research is everything. You have to know more about your market before jumping into business. Find out who else is in the game. Chances are, there will most likely be another business offering almost the same things as you will. Think about what competitor difference your product or service will have.
- Be sure you want to be a business owner! Don’t jump into business based on loving the idea alone or the thought of making lots of money. Being in business is about servicing customers with your product or service and being passionate about the experience others have with it. It can also be a lonely and stressful journey especially in the first few years where cashflow and capital may be a problem. Ask yourself, are you really prepared for all of this?
- Surround yourself with the right professional advisors. Good service providers like mortgage brokers, web designers, financial planners and accountants are crucial to any business. Forming true partnerships with such service providers can really make the difference to the growth and survival of your business.