The American Express’ Working Capital Research explored the impact cash flow uncertainty has on the mental health and wellbeing of Australian small-business owners.
The report found that 49 per cent of small-business owners said managing cash flow is the most stressful part of running their business, with 31 per cent losing sleep over the issue.
Around a fifth (21 per cent) claim their physical wellbeing has been affected by cash flow tension and 22 per cent report it has put a strain on or broken down personal relationships.
Additionally, around 17 per cent said they have considered ceasing operations due to cash flow challenges impacting their wellbeing.
The research examined the factors Australian small-business owners said are contributing most significantly towards their stress levels. Alongside customers not paying on time, inflation and the rising costs of living, a lack of knowledge about how to best optimise their working capital strategy were among the reported stressors. This is despite nearly 80 per cent of owners stating that managing their businesses’ working capital cycle is an important part of running their business.
More than half of small businesses said the stress caused by managing their business cash flow has increased since the start of the COVID-19 pandemic and 55 per cent said they rely on their customers to pay on time, otherwise they struggle to pay their own bills or suppliers.
Due to cash flow issues nearly half (49 per cent) said they are using personal funds to pay for outgoing expenses. About 51 per cent said having access to capital without interest for a longer period would help them pay off suppliers in time and give them more opportunity to invest in their business.
Emily Roberts, vice-president and general manager of commercial sales and account development at American Express, said running a small business can be incredibly rewarding, but the day-to-day stress of paying suppliers and staff, and finding new opportunities to grow, can take a huge toll on mental health.
“There are things, however, that owners can do to help alleviate the stress of running a business. Getting cash flow in check is one of these. Optimising cash flow puts business owners in a better position to navigate unforeseen circumstances, reinvest in their business, their people, and just as importantly, themselves,” she said.
To manage the impact of inflation, small-business owners are also seeking ways to ensure their money goes further. The research revealed 33 per cent of small-business owners agreed that due to inflation and the fluctuating Australian dollar, locking in exchange rates for overseas transactions would help them minimise spending uncertainties and help protect their profit margins.
Alexi Boyd, chief executive of the Council of Small Business Organisations Australia (COSBOA) said small-business owners are some of the most resilient people in Australia, but economic headwinds have created an environment where they are exhausted, mentally and financially.
“One of the most underutilised and least understood aspects of running a resilient business is managing working capital,” she said.
“This latest research makes one thing clear: small business owners are acutely aware of the challenges they face and are calling out for support to take back control of their business today and into the future. There is such an important role for the wider business community and government to play in providing small businesses with the tools they need to excel.”
Despite the significant mental health toll that working capital — or a lack thereof — is having on Australian small businesses, 72 per cent remain optimistic about their business’ future. In fact, 23 per cent agreed that if they had access to more working capital, they would invest in themselves and their family.
For access to mental health support and resources, head to:
Beyond Blue NewAccess For Small Business Owners: https://www.beyondblue.org.au/get-support/newaccess/newaccess-for-small-business-owners
Small Business Debt Helpline: https://sbdh.org.au/
Lifeline: https://www.lifeline.org.au/
Ahead for Business: https://aheadforbusiness.org.au/
