This document discusses common challenges faced by small businesses. It notes that 95% of businesses are small, with critical decisions made by one or two people without specialists. Some key challenges include inadequate planning, lack of professional advice, insufficient capital, poor management skills, and neglecting the business. As a result, 75% of small businesses fail within three years. Common reasons for failure include cashflow issues, lack of strategic planning, poor record keeping, and not understanding the market or customers. The document emphasizes the importance of seeking professional advice and support for small business owners.

1. Small Business Overview
Alan Lewis
Accountants

2.  "A business in which all the critical
management decisions are made by one or
two people, without the aid of internal
specialists"
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3.  95% of businesses
are small
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4.  Self motivated
 Seek business independence
 Very little knowledge of:
◦ general management
◦ bookkeeping skills
◦ management reports
 Do not understand the "business of
business"
 Neglect can erode the business base
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5.  75% failure rate within three
years
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6.  Inadequate planning
 Lack of professional
advice
 Insufficient capital
 Management skills
 Bookkeeping systems
 Accounting systems
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7.  Cashflow - especially payment of GST and
PAYG tax
 Lack of cash for growth
 Debt financing
 Cash management
 Taking too much money out
 Meaning of profit
 Poor debtor, stock, work in progress
control
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8.  Bank relationship
 Location
 Pricing
 Partner
 Delegation
 Big outside
organisations
 Disinterest by owners
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9.  People management skills
 Equity finance
 Succession
 Thinking through problems
 Mixing personal life and
business
 Staff relationships
 Major customers
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10.  What business are you in?
 Not understanding the market
 Relations
 Business Plan
 Budget and Cashflow Forecasts
 Lack of outside advice
 No strategic planning
 Empathy with customers
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11.  In focusing on the problems of small
business
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12.  Cost of labour
 Charge out rates
 Documentation of estimates
 Control of business overhead
costs
 Break-even level
 Cashflow control - especially
related to GST and PAYG
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13.  Control of work in progress
 Progress claims
 Changing economic conditions
 Review of Government decisions
 Taxation Office requirements
 Taxation Office power to fine
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14.  Subcontractor control
 Non recording of important matters on paper
 Funding of debtors, stock and work in
progress
 Submissions to banks and financial institutions
 Regular periodic financial reports
 Budgets, Cashflow Forecasts and other
estimates
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15.  Relationship with bank manager
 Business Plan
 Board of Directors/Board of
Advice
 Customer Advisory Committee
 "Think Big" in small business!
 Quality control
 Keeping records in a shoe box
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16.  Get advice before starting
 Business Plan
 Budget and Cashflow Forecast
 Accounting records
 Regular financial reports
 Review Budgets and Cashflow
Forecasts
 Conduct market surveys
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17.  Contact with customers
 Business location
 Update your product and technology
knowledge
 Review quality control procedures
 Hire and keep good staff
 Use financial data for managing the business
 Know your customer
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18.  Use an accounting firm
 Some accountancy practices offer
a wide range of services
 Use professional advisors as a
team
 Appreciate that you will need
outside advice
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