Five common SME financial problems

As an SME owner it is a distinct possibility that you will encounter financial problems when running your business. In order to overcome these problems it's important you first understand the reasons behind the problems.

Financial problems aren't new to the SME environment and many businesses suffer their fate as a result of a similar issue. We've sourced five of the most common issues that contribute to financial problems in order to help you identify where your business is struggling.


In the small business industry cash is king, and cash circulation is vital if you want your business to flourish or grow. There are many tips to ensure you have cash consistently streaming in and out of your business, but the most important thing is that you receive your money in a timely manner so you can meet your obligations as they become due.

Rising costs

Business costs are always rising where the cost of production can have a significant long term impact on profit margins. There are a few options to lower your costs, like reviewing your suppliers, negotiating discounts for early payments and reviewing any internal systems or processes that could streamline your business operation.

Taxation and business regulation

Tax and business regulations are always changing so it's vital to stay on top of these changes as they occur.

Subscribing to the ATO's small business email alerts or constantly visiting their website is one way to keep up to date with new changes or alternatively, try making constant catch ups with your accountant to discuss any information that could affect your business and how it operates.

Australian dollar

The dollar will have significant implications for many small business owners, but the effect it has on your business will be largely dependent on the activity of your business. Up until recently the strong Australian dollar would have generally favoured small importing businesses with a negative impact on those that were exporting. Now, with the dollar slowly beginning to drop the reverse will be occurring.

Interest rates

Constant fluctuations to interest rates can also be a strong contributor to business failure as these rates can significantly impact how customers react to the need for your product. Generally speaking if interest rates rise customers will spend less and as a result will more actively stick to a budget.

A good way to avoid the implication of rising interest rates is to ensure your business plan and cash flow forecast adequately prepare for the scenario of an interest hike.

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