BUSINESS CHALLENGES FACING MELBOURNE BUSINESS OWNERS IN 2022!
It goes without saying that the COVID-19 pandemic had a massive effect on the business community overall. Moreover, it is hard enough at the best of times but the pandemic has added an extra layer of business challenges ranging from supply issues, staffing issues, and the impact of lockdowns.
It is a perfect time to shed some light on the business challenges in the following segments.
We look at three key areas:
Business Challenge – Revenue and Cashflow
Many business owners face the challenges to stay on top of their finances and this can have a detrimental effect on their business.
Want to know more about the business challenges? Let’s identify what they are:
It is the income before any expenses that a business receives from its operations and activities and it is important
to have a positive revenue to ensure you have a healthy business.
It is the net amount of cash being transferred into and out of the business?
It is the “lifeblood” of any business that lessens the challenges of the firm. Therefore, it is important to maintain a positive cash flow to ensure that debts can be settled, the reserves can be built up and the money reinvested back into the business.
Both revenue and cash flow are vital to any business no matter what size or shape, and have been significantly impacted by covid, particularly in Melbourne.
To put it into perspective Victoria was locked down for 262 days.
It is the equivalent of going from the start of the year until the 19th of September without being paid or your income reduced radically.
Hopefully with the worst now behind us is a timely message that this area of any business needs close and regular attention not only in these times but is vital to the overall success of any business at any stage of its life.
Business Challenges – Staff and Hiring
With staffing being a challenge right now with a shortage of workers it is a timely reminder to focus
and perhaps change strategy on who and why you employ and what additional benefits you can offer with minimal cost.
Hiring the right staff can have a huge impact on the success of a business and the way the business runs.
It may be an easy fix to grab whoever you can but take a longer-term view and ensure that you are engaging the right person.
Covid in some instances has changed the way people go about their work so from an employer’s perspective change is also required.
Workers, where it is feasible are looking for flexibility however it goes further and employees are looking at the culture of a business
and want to feel valued and be able to grow and feel part of the business.
A happy and stable workforce can have a significant positive impact to your business and can add significant savings to your business in the long term.
Business Challenges – Profit
While taking profits into consideration, now check out the business challenges faced by the firms. Covid has had an impact or challenges on the businesses to operate to their full potential and as a result, profits have been impacted.
Let’s look at the components that make up a profit.
Gross profit margins
Gross profit is an important indicator of profitability if you are selling products. It looks at what percentage of profit you are making compared to how much the product is costing. The higher the percentage the more profit you are making.
An equally important component of profit. It is vital and should be done regularly to check expenses and ensure they are not increasing faster than revenue.
It is an easy trap to fall into that as revenues increase so do expenses.
Naturally, some expenses will be higher but have expenses outpaced revenue for the right reasons, and is it sustainable.
Net Profit Margins
Net profit is the key figure to determine the success of your business and the degree of profitability.
To run a successful business you should be reviewing this on a monthly basis and not annually.
Regular reviews will highlight trends and provide valuable information. This would help in making the proper and informed decisions to develop and improve the progress of your business.
Are you looking for an Accountant in Melbourne that specializes in small and medium businesses?Book A Strategic Profits Consultation!