Reinvestment a priority for small businessess

Two in five small businesses are planning to reinvest in their business in the 2017 financial year according to new research from the Commonwealth Bank.

The bank surveyed 500 small businesses with a turnover of less than $1 million, with almost half indicating they felt ‘confident’ and ‘calm’ in the lead up to the end of the current financial year.

Approximately 50% of respondents said ‘reviewing the performance of their business’ was their top priority.

However, cash flow continues to be a challenge, with the research revealing almost one-third of small business owners currently manage cash flow issues by dipping into personal funds.

“Given the research indicates small businesses are looking to ramp up expenditure in equipment and technology in the new financial year, there is a big opportunity to realise the potential of their business through a range of asset financing options, which can significantly alleviate cash flow issues,” says Clive van Horen, Commonwealth Bank’s executive general manager of small business.

Interestingly, just one in five small business respondents said they would prioritise a review of their technology, with small businesses with an annual turnover of less than $100,000 more likely to prioritise a review of their business technology than operators with a higher turnover.

“Small businesses understand the difference technology can make to their lives and the customer experience, but finding the time to research and invest can be difficult,” says van Horen.

“Today’s challenging marketplace calls for innovation, which requires leveraging digital technologies to maintain a competitive advantage.”

The research also points to a lack of preparedness for the future among small business operators. Despite 57% of respondents expecting their operations to continue on after they exit the business, two-thirds lack a succession plan.

The research found sole traders are least likely to have a plan (74%), and are also most likely to expect the business to close upon their exit (60%).

The top two tips from small business respondents for preparing for the end of financial year were:

·      Hire a good bookkeeper or accountant.

·      Be organised – update your records throughout the year.

Thursday, June 16, 2016
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