According to recent research, nearly 50% of small business owners and 60% of sole traders aren’t paying themselves just so they can keep their business running. According to Xero New Zealand Country Manager “When small business owners have cashflow issues one of the first things to go is their own pay.” 

This research states that approximately 80% of business owners reported feeling stressed, 70% said they felt anxious, 60% were having trouble sleeping, and 47% reported losing time with friends and family over the past 12 months. 

How can you lessen the challenges of cash flow management, so it doesn’t end up taking a physical and emotional toll? Here are our top tips for alleviating financial stress. 

#1. Have a written budget. 

Make sure you have a detailed budget or cash flow forecast, something that is easy to follow and review each month to make sure you are on track. A comprehensive budget can provide valuable insights into your business's financials, while a well-prepared forecast enables you to anticipate the company's financial trajectory and monitor its progress toward meeting its financial goals. Most business owners know how much their expenses are each month in their heads but don’t keep track of actual costs against what was forecast.   

#2. Know your reserves. 

Know what reserves you have available if they are needed. For example, do you have an overdraft in place should you need it? Do you have a good relationship with your bank should you need extra financing? Do you have surplus funds in your bank accounts? Do you have assets that could be sold if not needed to release some cash? Are you carrying too much stock? Unexpected expenses can occur suddenly. Ensuring you have reserves available can be your business’s financial insurance policy. 

#3. Review your pricing. 

Review your pricing, and how much you are charging your customers. Are you charging enough? Increasing your price annually by small amounts to align with inflation is better for your customer than a large price hike when you realise you are no longer meeting your margins. 

#4. Review your expenses. 

Have you considered the increased cost of living, the rising cost of buying goods, the increased cost of labour, higher import costs, etc? Review your expenses. Can you negotiate a better deal? 

#5. Address your debt. 

Taking on debt can be part of running a business, however, failing to meet your repayments or accumulating debt can lead to the unfortunate possibility of business closure. Address your debt if you have any. Make sure you have an agreed payment plan in place that you can afford. 

A good accountant is more than just a bookkeeper, we can help you develop a business plan, provide advice on how to grow your business and take care of those niggly financial tasks that take up your precious time. At Ōmokoroa Accounting we are here to help with every step of your business journey. If you are feeling overwhelmed, get in touch.