What happens when start-ups need to grow, but founders spend all their time running the business? Between writing invoices, collecting payments and chasing debts, these busy entrepreneurs have little time to map out the future of their fledgling companies.
Growth is important for every new venture. It’s what propels a promising, young business to become a strong, dynamic business.
Seizing on Australia’s love affair with food trucks was a masterstroke by Cory Becker. His truck, Snagga’s Healthy Sausages, was a hit at universities, festivals and private parties. Such a hit, he soon saw an exciting opportunity to set up a storefront.
“We basically refined our product, built our brand and opened our store in Geelong 18 months ago,” he says.
“The larger we’ve got the more important cash flow’s been because on a weekly basis we’ve got to pay our staff and utilities. Costs have gone up and we also need to ensure our corporate buyers get paid on time with invoices of about $3000 to $4000 three times a week.”
When the doors to Becker’s gourmet sausage eatery opened, overheads soared. It was a stark contrast when compared to the limited costs involved in running a one-man food truck.
Stock expenses grew, the number of suppliers rose and employees were hired. The list of incomings and outgoings suddenly became much more complex and for Becker, it highlighted just how critical a healthy cash flow was to his business.
“Cash flow was the main one because rent needs to be paid every month and in a food truck, you’re more flexible, if you don’t trade, you don’t spend money essentially,” he explains.
“Whereas with a store you’ve got to pay staff, rent, utilities. All those overheads come into play on a monthly basis.”
The store opened as a cash-only business, but Becker soon found this didn’t suit his customers.
Demand for cashless transactions drove him to implement a smart payment system. He chose Westpac’s Genie. Westpac Genie is an App and card reader that allows you to take payments, tracks sales and manages invoices on-the-go – anytime, anywhere.
Using the payment system across both the food truck and the store brought immediate benefits.
“It was a competitive advantage in those early days with the food truck because we were one of the only ones providing card payments,” he says.
“So if we were at an event we’d pick up a lot of business because people wanted to pay by card, not cash.”
But by far the standout benefit was improved cash flow. Having a system that made getting paid easier and faster gave Becker better control over his business’ finances.
Best of all, it created efficiencies that gave Becker time to review the business’s position and its future direction.
“What it means is every Monday after we do our food truck work over the weekends, all the cash is put into our account on a Monday morning and all our corporate buyers are settled on a Monday morning,” he says.
“We don’t have to wait to chase our customers two to three weeks or even two to three months down the track for funds.
“It just means our cash flow’s better, you can pay everyone on time and we have a better opportunity to reinvest because we have a greater understanding of where our cash flow position is.”
Streamlining payment systems can free up more time for entrepreneurs to focus on the next steps in their business journey. Ongoing innovation is a critical process not only for businesses, but the larger SME sector.
The role of small and medium businesses in Australia’s economy cannot be underestimated, says Jeff Hurdis, Westpac SME acting general manager.
“SMEs are the engine room of the Australian economy, and when they do well that actually flows through to the economy,” he says.
“It’s important to remember there are a lot of small businesses in Australia, accounting for over 44 per cent of total employment in the private sector.
“SMEs are one of the fastest growing segments of the Australian economy. They’re just amazing people who create employment for others so it’s important the growth is there and it’s important we support them.”
Time is an essential ingredient for growing businesses and this is a commodity that can be robbed by outdated or slow payment systems.
“Smarter payment options are vital,” Hurdis says.
“Our most recent SME index found 17 per cent of SMEs are using mobile applications in their business, which shows business owners are recognising the potential growth opportunities of embracing mobile technology.
Replacing clunky systems with faster, smarter programs lets business owners take their cash flow in hand and ultimately frees them of those frustrating day-to-day financial worries.
“The real benefit of a mobile payment system is actually peace of mind, because if you talk to any small business owner, they’ll say, ‘I worry about how to pay the next bill’. Overall we’re seeing most small businesses only have about two months of funds in the bank, so if you have bad debts or you don’t invoice quickly or you’re slow on collecting, then that cash can diminish quickly.
“Revenue perspective and ease of payment systems are big bonuses, but the biggest benefit is peace of mind, knowing cash flow and invoicing is running smoothly, which in turn keeps the business operating.”