A recent Xero Small Business Survey has found that many small business owners are struggling financially to the point of no longer paying themselves to keep their businesses running. The survey was carried out online with 500 small business owner respondents from across the country.
The study found that to combat cash flow problems, 60% of sole traders and 46% of business owners were skipping paying themselves, increasing prices on their products and services, and cutting costs.
Besides the financial strain suffered, these struggles were also found to be having an adverse effect on the emotional and physical health of small business owners. 80% of business owners surveyed reported feeling stress, while 70% confirmed anxiety. Problems getting adequate sleep were also reported by 60% of respondents, while 47% confirmed having lost time they would have spent with family and friends.
According to Xero NZ Country Manager, Bridget Snelling, cash flow is the biggest challenge faced by small businesses, with inflation, rising interest rates, and a fall in consumer spending adding on. She said that with small business owners being unable to pay their suppliers due to cash flow problems, there was a ripple effect being experienced throughout the economy.
Some small business owners like Cameron Goldsmid of concrete slabbing business, Tidy Slabs, have also highlighted staffing issues as a concern. Sales and the pipeline of work are also becoming increasing challenges.
94% of small business owners also said they were not achieving their business goals, while 90% were less confident they would be able to meet their financial obligations and reported suffering from stress. Snelling said that these responses reflected how closely linked financial health and business goals were to the business owners’ personal stress and anxiety levels.
The use of digital tools as a means to improve cash flow is evident. Snelling recommends digitalisation as it enables businesses to better anticipate their cash flow patterns and figure out how they can operate to improve their monthly cash flow positions. With the right digital tools, payments can be carried out faster as tasks such as invoicing and follow-ups can be scheduled better.
Xero is urging bigger businesses to pay their invoices on time to help reduce the cash flow problems being experienced by small businesses. An earlier report found that late invoice payments were costing small businesses in the country $456 million each year. With invoices being paid within ten working days, the economy is expected to strengthen.
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