New research by Australasian accounting and business advisory service, MGI, has discovered half of Australia’s small business owners do not have an accurate picture of their finances.
The stats revealed many SMB owners started their business to maximise their wealth. Yet the real picture reveals a mismatch between the desire to create wealth and the understanding of how to achieve this goal for their business.
According to the research, which included business owners from around Australia and New Zealand, the top three reasons SMB owners stated for not knowing about the financial performance of their business were:
- It was difficult to track
- They didn’t understand what the numbers mean
- The financial information they received was out of date
In response to the results, MGI has created the free My Catalyst benchmark tool in order for small business owners to get real-time insights into the performance of their SMB compared to other SMBs in their industry.
“The objective of the 2018 My Catalyst for Financial Success benchmarking tool, is to help business owners recognise their financial position in a way that is simple and easy to understand,” said Executive Chairman of MGI Australasia, Lorin Joyce.
“We conducted comprehensive research into the business community and found that only half the respondents actually know what is happening with their businesses finances. That’s alarming and it’s imperative to provide businesses with an easy financial benchmarking platform that can monitor the company’s financial performance and provide recommendations for improvement, all year round.”
Findings showed that cash flow plays a large part in business financial woes, with one in four respondents to My Catalyst confirming that cash flow was a major challenge for them.
These findings are supported by the 2015–16 Business Characteristics Survey (BCS) by the Australian Bureau of Statistics (ABS) which found that one in three businesses that sought finance reported the reason for the loan was to maintain short-term cash flow or liquidity.
“Having cash flow under control is just the first step and is oftentimes a symptom of a bigger financial issue,” Joyce said. “Business owners need to take charge of their finances if they want to get ahead of their competitors and achieve their personal and business goals. Our benchmarking tool is designed to give business owners an immediate visual representation of any blind spots they might be facing.
“We aim to help businesses identify problems and strategise solutions,” Joyce concludes.