A new report from cloud accounting solutions provider, Xero, has revealed many Australian small business owners are either failing to pay themselves a wage or are paying the bare minimum to get by.
The survey of local small business owners revealed the majority of small business owners were ill-prepared for the realities of owning a business. Over half (52 per cent) believed they lacked the skills in budgeting and cash flow management required to succeed.
The cash flow issues had resulted in impediments to business. 56 per cent of SMB owners admitted they either did not pay themselves a wage in their first year or paid themselves below minimum wage.
Further to this, a third of those surveyed admitted the first year of business was much harder than anticipated. 35 per cent admitted to suffering from stress as they worried about managing budget and cash flow.
Echoing this research, the latest data from Xero Small Business Insights shows that 47 per cent of Australian small businesses were in the red in the month of August.
Xero Australia Small Business Director, Penny Elmslie, said, “Owning a business and being your own boss is often the second great Australian dream but expectations don’t always match reality for first-time business owners.
“ABS stats show more than half of small businesses in Australia close within their first three years. Small business owners are making a lot of sacrifices in order to chase their passion – not only are they paying themselves the bare minimum, if anything, but they are under tremendous pressure to quickly pick up skills critical to making the business work.”
In response to the findings, Xero has launched a new podcast First Year Frontiers which provides early-stage startups and small business owners tips to overcome these teething issues associated with starting a small business.
“Given Xero began as a startup in a garage, we understand the passion and commitment of Australian small business owners just setting out, and the First Year Frontiers podcast is part of our push to help them thrive,” Elmslie commented.