When Kawaii Kids founder Andrea Harrison couldn’t get funding to grow her thriving kidswear business in regional Victoria, her stress levels shot through the roof.
Unfortunately, this situation isn’t unique. A survey of 300 Australian small businesses did by my company, Kikka, recently found the average SME owner finds it more stressful to run their businesses than raise their children, and the stress is largely down to managing money.
While it’s concerning that small-business owners like Harrison are being kept awake at night thinking about money, there is a way to reduce that stress – and that’s by taking a proactive approach to becoming more financially literate.
Not being financially literate means many small-business owners don’t actually know what success looks like. Too few small-business owners can make sense of their own financial statements, which explains why a high percentage of small companies fail. Even Harrison, who had built her business on smart financial decisions and never took on debt, ran into hurdles.
While you can’t expect every small-business owner to be an accountant, there is no doubt a savvy approach to money is the key to sustaining a thriving business. Here are some key tips:
Make time for research
If there’s one thing all entrepreneurs can identify with, it’s feeling time-poor. However, when it comes to money management, consciously blocking out time to address financial matters is integral to long-term success. Through the power of the internet, business owners can easily and quickly use comparison tools to ensure they are getting the best deals on their insurance, bills and business loans.
Harrison wanted to expand her business and design her own line of children’s fashion, but knew she needed improved cashflow to make it happen. She spent time assessing her options, speaking to banks and researching other options to decide what was the right choice for Kawaii Kids unique needs for optimum financial health.
Embrace tech: Finance management platforms
There are a host of digital platforms on the market designed to make staying on top of your budgets and costs far simpler.
Disruptive technologies have entered the fray to make running a small business more seamless – especially from a financial standpoint. Turning to digital invoice solutions like Invoice2Go has been said to greatly reduce the time it takes for outstanding invoices to be paid in full. And accounting software like Xero or Quickbooks are cost effective ways to manage salary payment and tax time when it rolls around.
After realising her bank couldn’t help her fulfil her business goals and offer her a timely loan, Harrison turned to alternate finance options. She was able to launch her fashion label and open her first first shopfront through taking out a loan from an online small business lender.
Technological help is hugely complimented by assistance from a host of advisors. I launched my own company as a startup and couldn’t have done it successfully without seeking advice from people I trust.
Money management is intimidating for owners new to the realities of running a business. Seeking the support of accountants, book keepers and other qualified advisors they can trust is the easiest way to gain financial know-how.
Integral to Kikka’s success has been the support of one of our board members Tony Brennan, a chartered accountant with 36 years’ experience who has spent his whole career committed to helping SMEs flourish. He’s also my father so I’ve had the benefit of his advice on tap all my life (as you can imagine not always followed in my younger days!)
Partake in small-business networking events and learning to see your accountants and other advisors as not simply paid service providers, but valuable educational tools when it comes to growing your business.
David Brennan, CEO and founder, Kikka Capital