Six years on from the GFC, and several recent surveys of SME business owners are proving that cashflow issues are not a function of the strength or weakness of the economy.
The team at multi-award winning strategic marketing house – Blue Frog Marketing have been monitoring the needs of the SME customers of several of their clients in recent times. They have found a strong commonality between different business types – all stating that cashflow is their #1 pain point.
Founder of Blue Frog Marketing and author of Marketing has no off Switch – Hunter Leonard shares some key insights with us from this research.
He says “the key thing we all need to remember is that many SME business owners are technical specialists in their product or service offering – they were never taught the general management skills of how to manage money. They were never taught the skills of how to plan, implement and measure their marketing plans.”
So, it’s no mystery then that cashflow and marketing are highlighted as the significant issues by SME business owners.
In six separate surveys of SME business owners involving more than 40 different industry sectors, here are the results:
– Between 30 and 50% of business owners nominate cashflow as the number 1 issue they face in business
– A similar percentage cite ‘getting new customers’ as their number #1 issue
– A similar percentage want their suppliers and partners to give them tips on cashflow and marketing
Delving further into the data, we find that business owners have trouble with cashflow because:
– They don’t have tight control over debtors, and debtor days are generally too high in small business
– They don’t have adequate knowledge on their true margins and therefore don’t know really how much money they are making from month to month
– They may understand turnover and margin and profit, but fail to translate this into cashflow
– Often their interest in getting new customers is that they see this as a solution to getting more cash, but this can often end up just exacerbating the issue, putting more pressure on cashflows.