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Money / Financial management

Survey finds small businesses already doing it tough before COVID-19

A study has revealed 1.2 million Aussie businesses were already making sacrifices to stay afloat prior to the shutdowns instigated by the Australian government in an effort to stem the spread of coronavirus.

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The research by money.com.au found 73 per cent of small business owners had forgone or delayed paying themselves due to cash flow issues,  56 per cent had cash flow issues that led to financial problems and half of business owners were earning less than their top staff.

The survey discovered financial issues were spilling over into personal lives and impacting the wellbeing of Australia’s small business owners.

66 per cent of small business owners admitted cash flow issues had led to financial difficulties in their personal lives.

Money.com.au spokesperson Helen Baker say the fact that half of Australia’s business owners with employees are earning less than their staff is one of the factors that is likely leading to cash flow problems.

“These business owners might have taken a leap to hire a highly qualified employee when they aren’t in the most financially stable position to do so. They might have an expectation they will find the income to cover the high salary, meanwhile taking a dip in their own income. I see this more commonly in service-based businesses.”

Baker said the government’s stimulus packages may be helpful but would likely come at the expense of small business owners own wages.

“Those businesses that have been struggling with longstanding cash flow issues prior to the pandemic will be struggling to stay afloat during this time. The Government’s measures may assist the business slightly, but this is likely to come at a cost – once again, seeing business owners sacrificing their own pay.”

Full survey results, including breakdowns across organisation size and location, can be found here.

This post was written by Cec Busby for Kochie’s Business Builders & is republished here with permission.

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