Small business strategies for tough times

According to MYOB, economic uncertainty is one of the most pressing issues facing Australian businesses. Soaring costs, inflation, and a decrease in consumer spending have resulted in a downturn across the small business sector. Chris Dahl, CEO of Pin Payments, dives into the deep end to share some tactics that will help your business stay afloat.

The recently released SME Performance Indicator by MYOB has revealed that construction and retail SMEs have suffered the most, with hospitality businesses also reporting record closures. Likewise, the Australian Securities and Investments Commission (ASIC) reported a 36.2 percent increase in companies entering external administration compared to the previous period, indicating rising insolvency rates.

With small businesses continuing to be challenged, and inflation remaining above the Reserve Bank of Australia’s (RBA) target of 3 percent, SMEs must implement survival strategies to navigate uncertain economic times.

Four survival strategies for your small business

Optimise your cashflow and cut costs strategically

Small businesses continually face challenges with cashflow due to difficulties getting paid on time and a reduction in sales during economic downturns. SME leaders should pay close attention to cashflow right now and put processes in place that protect the business. Follow up any overdue payments or consider imposing a financial penalty for any excessively late payments. Be sure to include this on your payment terms and invoices. You could also introduce incentives for early payments from customers or discounts for bulk purchases. Now is the time to tighten the business belt, so do an audit on your spendings to understand where you can temporarily cut the fat. Likewise, If there are areas or products in your business which are preforming better than others, look into how you could capitlise on that.

Diversify revenue streams and improve your marketing

As previously mentioned, now is the time to get tactical and explore where you can push certain services or products that are performing well. Consider how you can target new markets or customer segments, with your existing offering. Necessity is the mother of invention, so use creativity to think outside the box, to promote your business. If you haven’t utilised digital marketing to push your business, now is the time. Social media and online marketing are the key to help you reach a wider audience, so increasing your brand awareness across these channels is key. If you’re a service based business, customer loyalty programs and regular communication with your clients will help build strong relationships which could translate into repeat business. Whoever your end customer is, don’t let them forget about you. With a myriad of distractions and businesses in today’s world, you need to find the right balance between reaching out to your customers, providing reminders regarding products and services, and not becoming another spam message. It’s a tight tightrope but businesses who do it well build loyal brand followers.

Partner with other businesses and find collaborations

If business is waning, it’s time to get connected and look for opportunities to collaborate. Look for businesses that offer products or services that complement your own, by offering bundle deals or brand collaborations online. If you’re a service based business, partner with other complementary businesses and offer one another referral fees. This is typical in the beauty industry, where customers often seek the advice of one technician regarding another service. Likewise, industry events, trade shows, and local business meetups are great for finding potential partners. While the lead times for actual work may be several months, each event is getting you closer to another opportunity. You can also use social media platforms like LinkedIn to reach out to potential collaborators, and explore business matchmaking services that specialise in connecting businesses for partnerships. GoPro partnered with Red Bull to access their extensive extreme sports network, while Red Bull used GoPro’s innovative cameras to capture high-adrenaline events, enhancing both brands’ market reach and positioning.

Make the most of available grants, tax breaks, or subsidies

If all else fails, or you’re just seeking extra support, there are several subsidies and grants available to support small businesses through difficult economic times. Here are a few:

Grants and funding programs:

Small business energy incentive: Provides an additional 20 percent tax deduction (up to $20,000) on investments in energy-efficient equipment or upgrades for businesses with an annual turnover of less than $50 million.
Instant asset write-off: Allows businesses with an annual turnover of less than $10 million to continue instantly deducting the cost of eligible assets costing less than $20,000 (up from $1,000) until 30 June 2025.

Tax breaks and concessions:

Small business income tax offset: Provides a tax offset of up to $1,000 for eligible sole traders with an annual turnover of less than $5 million.
Payroll tax rebates: Some states and territories offer payroll tax rebates for hiring apprentices or trainees, or for businesses in specific industries.
Fuel tax credits: Businesses can claim fuel tax credits for fuel used in their operations, helping to reduce fuel costs.
Energy bill relief: Certain states and territories have introduced energy bill relief schemes to help businesses cope with rising energy costs.

How to find and apply for support:

gov.au grants and programs finder: This online tool allows you to search for relevant grants and programs based on your business type, industry, and location.
State and territory government websites: Check the websites of your state or territory government for information on local grant and support programs.
Industry associations: Contact your relevant industry association for information on sector-specific funding and support opportunities.
Business advisors: Consult with a business advisor or accountant for guidance on the most suitable support options for your business.

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