Overstretched and Struggling to Make Ends Meet – 8 Tips to Get Your Business Unstuck

Mismanaged overheads, large seasonal drop in sales or plain old bad luck. A crippling fluctuation in cash flow can take many forms – usually unexpected. Almost all small to medium-sized enterprises (SMEs) in Melbourne will experience cash flow challenges at some point. And over a 5-year period, most of those SMEs will go out of business. 

So how do some SMEs survive their cash-flow challenges while so many fail? In our experience it usually comes down to one simple thing.


Last year, according to ABC News 54,992 of Australia’s SMEs closed down. That’s a lot of businesses that didn’t have enough options to maintain cash flow. In this article we’d like to help make sure your Melbourne SME doesn’t join their ranks. 

Below you’ll find 8 tips that can make a crucial difference if your SME is struggling to make ends meet. Some of these 8 options may seem simple at first but take a little time to think about each. You’d be surprised how often clients forget the simple solutions – because they’re just too busy focusing on the wrong things.

1. Increase Prices

If you’re wondering how to improve your business cash flow, one solution is to increase prices. Naturally you need to do this in a way that your market can sustain. 

To some this idea is counter-intuitive. Many business owners, when caught in a bind, will prioritise short term solutions over long term viability. They’ll host sale upon sale, discounts, and reduced prices. For an SME on the edge, this is a danger zone. 

If you slash prices, be prepared to have a lower perceived value. This strategy may delay the short-term demise of your business but it’s nearly impossible to save it long term this way. Instead, if you find your SME on struggle street, it can be a sign it’s time to get more ambitious with your pricing.

Focus on the value of your offering and what sells. Look for cost-effective ways to leverage the value you can add in order to increase prices and boost profits. Sales are the ultimate source of increased cash flow, so you might try upselling or cross-selling as an efficient way to increase the average cash value of your existing customers. 

Look for opportunities to add greater value in each customer transaction, so you can support a higher price point. Not sure how? Get the help of your customers or client base to guide you. A questionnaire can be a great way to find out what your customers most need and are willing to pay more for. Remember, each customer is a relationship – and that means it’s important to listen as well as speak.

Implementing realistic but ambitious price-points can be the first step to saving your business. Initially increasing prices can be scary but it’s okay to experiment with how high customers are willing to go for real value. And if you find you’ve aimed too high in pricing you can always adjust prices down again.

2. Streamline Operating Expenses

Calculating how to improve your business cash flow is an equation of debits and credits – what’s coming in and what’s going out. Operating expenses or overhead costs can chew through a huge chunk of your budget. When you start to review these carefully, you can often find ways to reduce these expenses fast.

Embrace technology that can compensate for a team of workers on the payroll. Have a look at platforms like www.zapier.com and www.ifttt.com as great examples of automation. These can save many hours per week of human labour in all sorts of companies. 

For more cash flow solutions, look into areas like bookkeeping, accounting, and organizational software. These can save thousands of dollars each month, depending on your SME. For larger, one-off tasks that software or technology can’t replace, outsourcing to freelancers can keep costs down. You might even look offshore. Remember though, you often get what you pay for, so choose your providers based on evidence of past successes and it generally doesn’t pay to go for the lowest available pricing. 

Don’t worry, you can always re-hire your favourite employees once the business is up and running again, but, it helps to be constantly looking for ways to streamline your operations – especially using new developments in the rapidly changing world of technology.

A few quick and easy ways to streamline operating expenses and improve your SME’s cash flow may include:

  • Categorise all expenses into ‘need to have’ versus ‘nice to have’ – and set about lowering costs in the ‘nice to have’ category
  • Open a discussion about bulk rates or other price reduction strategies with your key suppliers
  • Consider the value of leasing better equipment (an initial expense that often improves efficiency long term)
  • Seek creative resource solutions – take time each week to think outside the box and brainstorm

They say necessity is the mother of all invention, so get inventive.

3. Make Strategic Adjustments to Vendor Payments

Along with seeking bulk prices from vendors and distributors, as mentioned above, consider other ways your vendors might work with you to keep your business strong. After all, it’s in their interests that your SME can weather any storm in your cash flow. If you go out of business, there’ll likely be a negative knock on effect for your vendors. 

So, think of win-win adjustments to your payment structures that could help you both. For example, vendors love being paid early. Perhaps you might create arrangements to make advance payment in exchange for a significant discount. 

Alternatively, you might discuss options for payment plans. This might be a good short-term solution if you’re in a bind and paying invoices in full makes cash too tight.

4. Incentivize Early Payments & Increase Late Fees

You might also consider creating similar payment incentives for your own customers and clients. 

You could provide early payment options and full-payment options on invoices and also increase late fees. This a subtle but effective business cash flow solution. 

It may be helpful to welcome cash payments where feasible. In some businesses, cash discounts can help your business operations while making you more accessible to new consumers, for an effective win-win.

5. Opt for a High-Interest Business Savings Account

Even struggling businesses use a savings account. Perhaps whatever cash you have saved could be working harder to earn interest while it’s on standby. 

High-interest business savings accounts can be a helpful defensive tactic to protect your business cash flow. Remember, even a little cushion here and there can add up to an effective cash flow solution for your SME. 

6. Seek an SME Loan & Other Financing Solutions

A short-term business loan is an increasingly popular SME cash flow solution. Australian SME business loans and advances are generally accessible for 6 months up to 3 years. Many start at around $5,000 and go up into the hundreds of thousands. 

Commercial lending rose over 25% in Australia last year alone. Lenders continue to create revolving and fixed lending opportunities to save cash-strapped Melbourne SMEs and help them grow.

If you’re able to put down at least 20%, maintain positive credit, and provide appropriate tax documentation, the Small Business Administration may support your lending options.

The SBA isn’t a lender but becomes a guarantor for those applying for business loans. Having the SBA on your side can help a lot when you’re after a business cash flow solution.

The new tech lenders like Prospa, Moula and Banjo are using highly efficient digital platforms to provide fast cash flow to qualifying borrowers. We recommend them as a potential short-term solution in many cases. If you’re considering this option, be sure to read our two-part guide, The Rise of the Tech Funders, A Guide to Using Fintechs for SME Funding.

7. Liquidate Old Inventory

Inventory can be a great expense for all sorts of SMEs. If you have inventory that isn’t moving fast enough, profit drops and cash flow weakens. Liquidating inventory that isn’t selling can be a good short-term solution to get money coming in instead of it sitting around locked up in stagnant assets. 

After liquidating old inventory, only replace it with more of what’s selling well. 

Remember the Pareto Principle. This tried and tested theory states that often 80 percent of your profits will come from only 20 percent of your sales. While the remaining 80 percent of your sales will account for only 20 percent of your profits. 

See if you can identify 20 percent of your inventory that’s bringing in 80 percent of your profits – and focus your energies in that zone. Once your business cash flow is revitalised, it may become appropriate to expand your inventory again and explore new opportunities. But only expand once you’ve laid firm cash flow foundations.

8. Prepare an Exit Strategy (Just in Case!)

If a ship is sinking, there’s nothing honorable about going down with it. Should your business or you become overstretched and run out of resources, a strategic exit plan can reduce losses or may even result in a profit.

Exit strategy tips:

  • Exhaust all other avenues of saving the business
  • Consider liquidation or acquisition
  • Get several opinions when valuing your business or business potential
  • Explore whether bankruptcy is a good strategic option

Naturally, it’s not your goal to let a business go. However sometimes making this tough choice can be a necessary step. It may be the key to retaining your strong personal financial profile and protecting your ability to invest in or start another business in the future.

Bottom Line

Of course, saving your Melbourne SME isn’t always as easy as this list might suggest. If you need more sophisticated options, then working with a lender or financial institution that provides real advice may help you achieve your goals in a better way. 

At Epoch Financial, we don’t simply offer theoretical options. We provide tailored strategies that could help your SME to access real cash flow solutions. Interested in getting some professional guidance on what options could suit you? Get in touch for your no-obligation consultation with one of our advisors today.

This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances.

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