Why is the cost of living crisis hard for family business owners?

Family business owners have to balance the needs of their family and their business, which may
sometimes conflict or overlap. For example, they may have to pay for their kids’ education, their
own retirement, and their business costs, like rent, wages, taxes, and supplies. They may also handle
the stress of running a business, like managing employees, customers, suppliers, and competitors,
while keeping a good family relationship. The cost of living crisis adds more trouble, as it lowers the
buying power of both their customers and themselves, making it harder to make money and to pay
for their costs.

How can family business owners use finance to help with their cash flow?

One of the key things for a successful business is a positive cash flow, which means more money
coming in than going out. A positive cash flow lets the business pay its bills, invest in new
opportunities, and deal with unexpected costs. But the cost of living crisis can make it harder to have
a positive cash flow, as it may lower the demand, raise the costs, or create cash flow gaps. So, family
business owners may need to use finance to help with their cash flow, like:

• Budgeting and forecasting: This is planning and tracking the income and expenses, and predicting the future cash flow. Budgeting and forecasting can help to find and focus on the important costs, to use resources well, and to expect and get ready for cash flow issues.
  
• Reducing costs and increasing revenue: This is finding ways to cut expenses, like bargaining, switching, or getting rid of spending. It is also finding ways to raise revenue, like increasing prices, reaching more customers, offering new or better products or services, or making more money from other sources.
  
• Accessing external funding: This is getting money from outside sources, like banks, investors, or government agencies, to support the cash flow. External funding can come in different forms, like loans, grants, equity, or crowdfunding, and each has its own pros and cons, like interest rates, repayment terms, eligibility rules, or ownership shares. So, the business owner should compare the options and pick the best one.
  
• Talking to a trusted finance professional: This is seeking advice from someone who knows about finance and business, like an accountant, a finance broker, or a mentor, before the business has cash flow issues. Talking to a trusted finance professional can help to avoid or solve cash flow problems, as they can offer guidance, suggestions, or referrals that suit the business’s situation and goals. It is much easier and cheaper to sort this out before it becomes a problem.

If you would like to discuss your options, please reach out to one of our staff members for a chat.
We have one for the most diverse finance broking businesses in Australia so we well positioned to
help.