People to chose to work for themselves for many reasons. They like to be their own boss, want the freedom that comes with being able to set their own path, and hang out their shingle.
But running your own show, especially once you take on staff and grow from a single operator to a small and medium business brings with it many challenges. One of those challenges has always been cash flow.
Small businesses often have to pay employees and suppliers at a rate of higher frequency than they receive payment from companies they do business with. Naturally, that causes financial pressure and it’s often why small businesses put up their bricks and mortar assets as collateral, or factor their receivables book in order to ease cash flow pressures.
But according to the latest MYOB SME Snapshot there is another knock on effect. While small business owners regularly make superannuation contributions for staff it seems they are not providing for their own retirement.
That means “54% of respondents will not have saved enough when the time comes” to retire Tim Reed MYOB CEO said in releasing the survey.
The level SME owners report they need to have saved to retire comfortably is $1 million.
Reed said previous MYOB surveys had consistently shown that cash flow concerns are top of mind for small business owners.
“Being a small business owner means contending with multiple challenges to the financial health of your enterprise. SMEs are often forced to wait months for payment, resulting in cash flow problems. This lack of cash can then impact the owner’s ability to pay their own super, as well as other pressing payments such as wages and rent,” he said.
He’s calling on big business to recognise the pressures a large number of their smaller suppliers are under and pay them faster.
“Big business should lead here, by ensuring all SMEs are paid on time. Unfortunately, some look to use their power to implement unreasonable business practices, such as 90-day payment terms,” Reed said.
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