What are 4 of the biggest challenges for growth-oriented SMEs?

Published Categories: Tags:

Many SMEs want to expand their business, but what are the biggest hurdles for them to overcome in the current economic climate? Let's take a look.

GrowthiStock 864307276

Around one in 10 Australian SMEs are in a constant state of expansion, according to National Australia Bank (NAB). Millennial business owners are particularly ambitious, with 66 per cent saying they wanted to grow their operations over the next three years in 2017.

But SMEs face various challenges in the current economic climate. Let's examine some of the hurdles that growth-oriented businesses must overcome.


1. Finding and retaining new clients


The Suncorp 'SME vs Me' report, published by the Courier Mail, revealed 41 per cent of small business owners are worried about securing new customers or clients. Meanwhile, 36 per cent of SMEs said losing clients was their biggest commercial risk in a recent QBE Insurance survey.

Finding new clients and losing existing ones were the respective top concerns of each piece of research, emphasising how much these issues keep SME owners awake at night.


2. Late payments


Australian businesses may be settling their invoices faster than ever before*, but 24 per cent of SMEs cite late payments as the top threat to their organisation this year, according to QBE.

Failing to get paid on time often means businesses don't have the capital available to pursue their growth plans, such as investing in new equipment, expanding product lines or setting up a new office.  


3. Stuttering business conditions and confidence


The latest NAB SME Quarterly Survey showed both business confidence and conditions declined in the three months to June. The good news is that both indicators remain above their long-term averages.

Growth-oriented businesses may also be pleased to hear that organisations in the 'expansion' and 'business as usual' phases of the commercial lifecycle both reported significantly higher confidence and conditions than the average SME.


4. Access to finance


Cash flow can be a major problem for SMEs, and the Suncorp research showed one in three business owners use their personal finances to fill the gaps. Unfortunately, two-thirds report their wellbeing suffers as a result.

Access to finance during these times can be difficult, and many traditional financial institutions may be forced to tighten their lending criteria following recent revelations from the Banking Royal Commission.


Are you ready to expand?


We've discussed the various challenges that SMEs face when trying to grow, but what about some solutions? More specifically, business finance solutions.

Classic Funding Group can provide a range of options for organisations hoping to take the next step in their growth plans. Whether it's debtor finance, equipment finance or integrated solutions, our team can help you choose the best way forward. Click the button below to learn more.


Enquire now

*The average late payment time was 11.7 days at the end of March 2018, illion figures show. This is a record low.