There’s a lot going on in Australia, and it doesn’t look like the challenges will be fully abated anytime soon. With much of the population back in lockdown, and state borders are closed, businesses of all sizes are struggling to make it through. A select few are thriving, but most simply are not. In addition, from the 1st of July, the minimum wage has increased by 2.5%. While a small increment, it adds another additional expense for those SMEs more likely to be impacted by lockdowns during this difficult period.
Restrictions make it very difficult for many service-based and retail businesses to operate, let alone cover these added costs of employment. Employees are necessary to operate, so any hits to the bottom line need to be covered from somewhere else. While there is no magic answer to the current situation many SMEs find themselves in, there are many ways we can look at addressing the issue. Let’s take a look at a few ideas you might want to implement in your businesses today.
Find Ways to Outsource Repetitive Tasks
Now is the perfect time to examine ways to make your task flow more efficient. The world has been pushed increasingly online over the last eighteen months, and international talent is more accessible than ever before. While it’s not feasible to outsource many parts of operations, particularly areas that require feet on the ground, it is possible to optimise repetitive tasks. For example, social media marketing and scheduling is a time consuming yet necessary part of growing your business and reaching your customers. Here are some more outsourcing ideas!
There are excellent outsourcing opportunities to hire professionals that specialise in this very task at a cheaper rate than even the local minimum wage. Your local staff can instead focus on other value-adding tasks and opportunities within their core circle of competence. It can also reduce a lot of headaches. Instead of running your own payroll and doing your taxes, you can leave it to a reputable team that specialises in optimising your processes, so you can focus on operating your business and boosting your margins elsewhere.
Reexamine Your Pricing
Pricing shouldn’t stay stagnant – it needs to adapt to the situation, supply and demand. Raising your prices over time makes sense, if for no other reason than to keep up with inflation. Your supply costs will also rise over time, as will your costs of doing business, such as wages (of which the minimum wage is a driver). In theory, the market should adjust to higher prices as consumers can afford them from their increasing wages, income, or asset prices.
However, this may not occur, or your competitors may simply adopt a different strategy. Keeping prices the same, or indeed lowering them, will increase competitiveness and possibly attract new customers. Reducing prices on a highly competitive product may do wonders for your market share at the expense of your profit margin – weigh up the advantages and disadvantages and be competitively aware.
Invest in Your Business Efficiency
As almost all areas of life move towards automation and digital augmentation, your SME must not be left behind. One of the best ways to maximise your operations throughout lockdowns is to be digitally available. While every industry is different, investing in technology, software, and new ways of doing business is likely to generate a lasting return moving into the future. Alternatively, machinery and equipment can increase productivity by enabling staff to achieve more work in less time. Equipment can be expensive, but the benefits generated are often long-lasting and critical for operational evolution over time to maintain and enhance your competitiveness.
Maximise Your Access to Cashflow
Perhaps the most critical component for your SME is cash flow. It might seem daunting to take out a large business loan when there is still so much uncertainty, but other options are available. One such solution is debtor finance – it allows your business to access cash sooner from unpaid invoices. Debtor finance providers will pay you up to 90% of your verified outstanding invoice value upfront. When your customer pays and the funds are received by your invoice finance provider, they’ll remit the remaining 10% minus a small fee to compensate for early funding. Your business can use this cash instantly to pay your bills, secure new suppliers or invest in growth opportunities. Since it’s linked to your sales, it is scalable, meaning that when things slow down, so does your use of the facility until you’re ready to ramp up again.
TIM Finance’s purpose is to help Australian SMEs grow and sustain themselves with access to fast and flexible funding, including debtor finance. We’re here to help you with your business’s unique financing situation. Contact us today to get started.