Research findings released this week reveal that loss of clientele was the biggest barrier to small business growth in financial year 2012/13.
Findings from the First Class Accounts Small Business Barometer 2013 showed a third (33 per cent) of small business owners in Australia attributed lack of growth or business stagnation to a loss of custom.
This was followed closely by increased overheads (30 per cent), while one in 10 (21 per cent) claimed unforeseen IT expenses had hit their finances hard.
The report suggests that financial planning and management may also have played a key role in lack of growth for many businesses with only 21 per cent of small business owners setting an annual budget.
In addition, just 15 per cent of those questioned hired a bookkeeper to assist in managing their finances. 48 per cent of business owners cited expense as the main reason for not hiring professional help with their books, indicating that many had taken on bookkeeping duties themselves in an attempt to cut costs.
However this could prove more costly in the long run, said First Class Accounts CEO, Joe Piovesan.
“As a business owner it’s tempting to take on bookkeeping duties yourself in an attempt to save money,” he said.
“However the Small Business barometer has shown one in 10 small business owners in Australia have lost money through poor financial management practices, such as being penalised for late BAS submissions.
“If you are unsure, it’s best to enlist the help of a professional. While there might be an initial up-front cost it is likely to save you money further down the line.
“It will also free up business owners to spend more time on growing their business.”
Mr Piovesan said the Small Business Barometer had unearthed some interesting findings around financial management.
“The research has indicated there are some issues with client servicing which are causing small businesses to lose custom – and therefore profit,” he said.
“However, it is positive to see that small business owners are realising the need to reduce their costs if they are to survive in this tough economic climate.”
Despite this, Mr Piovesan said further education is needed when it comes to prioritising where these cuts are made.
“Many are opting to save money by reducing or removing essential professional help and services instead of, for example, cutting overheads,” he said.
“Unforeseen expenses such as increased overheads, recruitment fees due to staff losses and IT costs were all cited as significant profit barriers. Comprehensive budgeting and planning will help avoid this.
“With the end of the financial year approaching, now is the perfect time for businesses to reflect on the last 12 months and review their financial planning to ensure growth in the year ahead.”
About the First Class Accounts Business Barometer 2013
First Class Accounts asked 250 businesses across Australia to share their sentiments and behaviours towards financial management in order to identify key financial issues and concerns affecting small businesses today. You can download a copy of the First Class Accounts Small Business Barometer 2013 by clicking here.