According to new research from St George Bank, the top business concerns for tradies were identified as; being paid on time and profitability, followed by the ability to pay bills and manage their cashflow.
The St.George Bank Tradie Economy Report released in July surveyed over 600 people across Australia who identified as a tradie. Most respondents work in building and construction, electrical, as well as landscape and gardening. The research also points to growth in female tradie numbers with women representing 40% of respondents.
75% of Australian tradies surveyed said they aspire to run their own businesses rather than work for larger companies. This is interesting given the much-publicised potential risk to small operators working in the building and construction field. However, it is testament to an entrepreneurial nature, as well as the possibilities within the sector.
“Tradies are vital to the prosperity of the Australian economy. With the average tradie charging over $45 an hour for their services it’s no surprise to see there’s such a huge appetite for tradies to start their own businesses.” Anthony Mathews, National Head of SME at St.George Bank.
Undeterred by talk of tough business conditions, for smaller operators looking to co-exist in a market dominated by large players, careful planning will be key. In a landscape where late payments can lead very quickly to business insolvency, SME’s must plan to manage shortfalls and keep their business afloat through fluctuating market conditions.
Pain points – profitability and cashflow
The report found than trade businesses are most concerned about payment times and profitability (each 37%), ability to pay bills/wages cashflow (33%), the state of the economy and ability to grow their businesses in a slowing economy each 33%).
As we all know, maintaining healthy cashflow is key to the success of any business. Within the trade field there is often further pressure brought about by the need to quickly increase labour or equipment to meet a demand or fulfil a contract. These fluctuations in demand put significant pressure on budgets and cashflow within the business. Add to this, operating in an industry where late payments are endemic can mean that taking advantage of growth opportunities can be at a tremendous risk.
Concerningly, the report also found that the majority of respondents financed their business through their own savings (57%), followed by a personal loan or credit card (both 33%). These kind of finance options, where the business owner’s personal savings or house is at risk, or they are crippled by debt and repayments, can lead to a toxic cycle of uncertainty and worry.
With 39% of respondents stating that they stop to think about their personal finances at least once a week and 24% do so every day, it is safe to say that financial concerns weigh heavily on the mind.
However, only half (49%) visit a financial adviser, while 13% don’t see one at all. This is interesting, and certainly an opportunity for education around how the trade sector could better manage their finances to their own advantage.
Invoice Finance is a great option for SME’s, particularly those working with big business. Using an invoice finance facility gives a business access to the funds from their own invoices as soon as they are issued. Steadier cash flow means the business is better equipped to weather changes in the market, upscale when necessary and fulfil their obligations – all without taking on debt or putting personal assets on the line.
Talk to Apricity Finance today about how an invoice finance facility could help your business grow.