Brokers can help SME clients navigate the cash flow demands of the holiday season and drive growth in their own business, says Cameron Poolman, CEO of OnDeck Australia.
It’s that time of year when Australians spend up big, and it’s easy to assume that small businesses will make a motza in the lead-up to Christmas.
But the festive season also brings challenges for SMEs, and brokers can play a key role helping SME clients access much-needed finance to navigate the holiday season.
According to our research, the silly season can bring serious challenges for small businesses. Three out of five (58 per cent) SME owners say they are negatively impacted by major calendar events and public holidays such as Christmas – often as a result of cash flow pressures.
Many SMEs hire additional staff over the festive period, and this means managing recruitment costs and higher than normal payroll expenses. Other costs such as marketing and advertising also tend to be inflated in the lead up to Christmas.
But the financial squeeze doesn’t end with Boxing Day. Come the New Year, SMEs often experience a slowdown in trading as shop-weary consumers head to the beach, or request refunds on Christmas purchases – often at a time when staff want to take leave.
For the majority (59 per cent) of small business owners, having fast access to finance would provide a solution. And it’s not just about managing costs. Additional funding can let SMEs make the most of festive season spending.
A homewares retailer for example may need an extra $20,000 worth of stock heading into Christmas – that’s inventory that could deliver an additional $10,000 in gross revenue. The catch is that the business may not have the cash flow to support an upfront purchase.
It’s an area where brokers can support time-poor SME clients – and grow their own business – by expanding into commercial finance. It pays however to look beyond traditional banks.
OnDeck’s research found that over one in four SMEs have struggled with the protracted loan application and approval process of traditional lenders.
So, in the lead-up to the festive season, time is of the essence.
SMEs that don’t have their finances ready to go to take advantage of opportunities when they arise, will miss out.
For brokers, it can make the pre-Christmas period an ideal time to expand into SME lending.
Indeed, our figures show that one in four home loan clients are likely to be SME owners, and along with a chance to unlock the full potential of your customer database, SME loans can provide a launch pad for growth and diversification for 2020.
Cameron Poolman has served as OnDeck Australia’s Chief Executive Officer since the company’s launch to the Australian market in November 2015.
Prior to joining OnDeck, Mr Poolman was founder and CEO of Grays Online, one of Australia’s largest e-commerce groups focused on small businesses, from 2000 to 2014.
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