Small retailers’ cash flow issues impacting their mental health
Small Aussie retailers are struggling with the mounting pressure of increased cost of living and climbing interest rates, with the added volatility of staff shortages and increased wages making up a perfect storm for poor mental health.
With Christmas around the corner small business owners are scrambling to address these issues, but for many the pressure has become too much. Indeed, new research from American Express found nearly one-fifth (17 per cent) of small businesses considering shutting down their small business because of the impact it is having on their mental health and wellbeing.
The stress associated with managing cash flow during this period is causing business owners to lose sleep (31 per cent), experience an impact on their physical and mental wellbeing (21 per cent) and a further 22 per cent have reported it has put a strain on, or broken down, their personal relationships.
With Australian small business owners (SBOs) naming repayment cycles and cash flow as one of the biggest barriers to sustaining their business and maintaining personal wellbeing, American Express has made enhancements to the American Express Business Card. The card is designed to support small business owners and extend their working capital cycles with an extended cash flow benefit of up to 110 days to pay for purchases and no pre-set spending limit.
“Running a small business can be incredibly rewarding, but the day-to-day stress of paying suppliers and staff, and finding new opportunities to grow, can take a huge toll on mental health, especially when the unexpected happens,” Emily Roberts, vice president and general manager of commercial sales and account development at American Express says.
“There are things, however, that owners can do to help alleviate the stress of running a business. Getting cash flow in check is one of these. Optimising cash flow puts business owners in a better position to navigate unforeseen circumstances, reinvest in their business, their people, and just as importantly, themselves. Tools such as business charge cards help to increase funds that are available for day-to-day operations and provide extra breathing space to repay.”
Jennifer Mekhaeil, accountant and founder of skincare company Go Bare, says while she is an accountant by trade, her working cash flow for Go Bare is a constant source of worry.
“Being in the midst of an international expansion, the stress has definitely flowed into my everyday life, prompting me to lose sleep and negatively impact my mental health,” she says.
“For me, negotiating different payment cycles with my various suppliers and necessary business services has been instrumental in maintaining my available working capital. Having the right partner in American Express has also been critical. Simple yet meaningful services across foreign exchange and AccessLine have helped to keep Go Bare running as we navigate this exciting new phase of growth.”
With SBOs admitting they don’t have the knowledge they need to best optimise their working capital strategy, many are looking to the government and financial service providers for more support.
“Small business owners are some of the most resilient people in Australia, but economic headwinds have created an environment where they are exhausted, mentally and financially,” adds Alexi Boyd, CEO of the Council of Small Business Organisations Australia (COSBOA).
“One of the most underutilised and least understood aspects of running a resilient business is managing working capital. This latest research makes one thing clear: small business owners are acutely aware of the challenges they face and are calling out for support to take back control of their business today and into the future. There is such an important role for the wider business community and government to play in providing small businesses with the tools they need to excel.”
Despite the significant mental health toll that working capital—or a lack thereof—is having on Australian SBOs, 72 per cent remain optimistic about their business’ future. In fact, 23 per cent agree that if they had access to more working capital, they would invest in themselves and their family.
“The topic of money for any business owner can often be a stressful one, but there are ways that owners can set themselves up for success and ease some of the burden they carry home with them,” Sarah Davidson Holloway, start-up entrepreneur and media personality says.
“For example, seek financial advice from an expert who can share savvy ways to make money go further; take breaks away from the business to reset and gain a fresh perspective; invest in the right cash flow tools that exist to help small businesses succeed.”
Leanne Faulkner, Founder of Fortitude at Work and small business mental health advocate adds that it’s important to understand the nuances of small business and the way this affects our mental health at work.
“We live and breathe our businesses and don’t shut off from everything,” she says.
“We know lots about creating a healthy workplace in large organisations, but it’s a mistake to think small business is simply a smaller version of a big company.
“How SBOs work, how we make decisions and how we thrive is different. Through these findings, SBOs say we do not work in a bubble, we rely on others in our business ecosystem to help support our ability to work well every day. Any support from big businesses to help empower our daily operations and potentially relieve some working capital stress is welcome, so we can be at our best and focus on growth.
“There is now more community support available for the small business sector and I’d encourage all SBOs to reach out and talk to someone if they’re feeling overwhelmed, regardless of the situation. There are many who want to help us.”