A recent study of 255 Australian small business owners showed that more than 35% struggle with managing their business finances. Almost a quarter of those surveyed noted that they had recently suffered cash flow issues that had brought them close to closure.

A clear understanding of your business finances is the first step in avoiding cash flow distress. Once you know your financial position, you can then take advantage of simple strategies that will help your business grow in the long term.

In this article we share 5 tips for small business owners to create a financially sustainable business.

1. Separate personal and business expenses

Your expenses should be recorded and separated from the day your business opens, however it’s never too late to start. Whilst sole traders are not required to pay themselves a wage, it’s a great way to determine your living expenses vs. business expenses and budget both accordingly.

2. Invest in staff training

Employee development is often overlooked in small businesses, but it can have a huge impact on staff output and reduction in staff turnover. Focusing on employee development is difficult to do on a tight budget, however the long-term reward is often much greater than the initial expense. Your state or local government may offer grants to help fund your staff training, or speak with your broker to see if training costs may be structured into a business loan.

3. Don’t forget your super

Sole traders and business partnerships are not legally obliged to pay themselves superannuation, however this can be a trap years down the line when the retirement savings are well below the national average. If you are not yet paying yourself super, start now. A 9.5% contribution on top of whatever you pay yourself as a salary will bring you up to the national average, however if that is not affordable you should just contribute as much as you can afford.

4. Use the right type of finance to help your small business grow

Getting the right loan for your business needs can save you thousands in interest costs and fees, as well as help to protect your liquidity. For example, cash flow finance may be a better option than a business loan for a small business with slow-paying customers, and asset finance may be a better option for a bakery looking to purchase new equipment. Speak with your broker for a review of your current business finance set up, to make sure it’s working for you.

5. Manage your cash flow in the off-season

The real test of the strength of a small business is how well they manage during slow seasons. Managing your cash flow during slow periods is the key to long-term business success, and there are financial products available to help you with this. You may wish to consider equipment finance on your existing assets to free up cash for other expenses, or to look for alternative sales channels until the market picks up.


Whether you are a start-up or have been in business for years, Assembly Finance can review your current business finance set up to ensure it works for you. Contact us for a free assessment today.

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