What keeps business owners awake at night? - new survey identifies SMEs' big issues

The biggest issue affecting the country's 1.7 million small and medium-sized (SME) businesses is not the economy or the price of petrol.

Cash flow is the major issue that keeps business owners and managers awake at night, found the National Australia Bank (NAB) in a survey of SMEs.

"30% of business leaders we surveyed said cash flow was the biggest issue giving them nightmares," said George Frazis, executive general manager of Business and Private Banking at NAB.  "This is up from 27% last year.

"Cash flow overtook staff issues, which was last year's number one nightmare for business leaders," said Mr Frazis today.  "In what was the biggest drop in the survey, issues with staff worried just 6% of business managers this year, compared to 29% last year.

"Other issues worrying business leaders include operational issues, which keeps some 9.5%, of business managers awake of a night.

"Issues with customers concerned 8% of businesses," he said. Respondents also identified other areas of concern such as compliance, tax, economy, weather, business strategy and retirement.

"A new issue in this year's survey was that 5% of business owners worried about their workload, with many commenting that there isn't enough time for their heavy workload," Mr Frazis noted. 

The increase in businesses' concern over cash flow is interesting, given the health of the business sector.  One reason businesses experience cash flow problems is when they grow and this could be the case for this increase. 

"As your company grows, your cash management needs become more complex.  But this should not hold you back from maintaining good cash flow practices," said Mr Frazis.  ""A cash flow crisis can occur in the best business. Profit doesn't automatically equal cash."

There are several ways for business owners and managers to improve their cash-flow.

1. Reduce 'Lazy' Cash - 'lazy' cash can be tied up in inventories. Reducing excess stock or obtaining stock on consignment can help free your cash.

2.  Manage Your Inflows and Outflows - receiving payment from your customers earlier and paying your suppliers later can both improve your cash flow position.  Managing your slow paying customers and your exposure to any one large customer is also important.  Improving transactional banking can also help.

3. Get Your Financing Right - short-term finance, such as an overdraft or invoice discounting, is designed to help manage weekly and seasonal variations. Longer-term finance should not be used to attack short-term cash flow problems because even if the lending rate is lower the cost of unused funds is often greater.

4. Plan Ahead - create a forecast.  Estimate total cash receipts for the year as well as total cash disbursements for the year, month by month.

"Through listening to customers we are providing solutions that are making banking easier and helping them sleep better at night," said Mr Frazis.  This includes:

* "On The Spot" business loans, where customers receive faster response times to their requests for loans - many taking only 15 minutes,

*  Providing business customers with easier asset finance and leasing; and

*  Improved credit decision processes that increases credit decision limit for NAB's frontline relationship  managers.

About the survey
The survey of 420 businesses was conducted via telephone by NAB's Business and Private Banking Australia division in April-May 2006, to better understand the needs of its customers.

About NAB Business and Private Banking
The National Australia Bank employs over 5,650 business banking specialists and 450 financial planners and specialists at over 158 business banking centres Australia wide.  It is one of the market leaders in providing business banking services to Australian business. For further information visit http://www.nab.com.au/Business_Solutions

For further media information, please contact:
Guy McKanna
Head of Corporate Affairs
National Australia Bank Limited
T  (02) 9237 9817
M 0402 893 843