Most types of businesses go through predictable cycles, during which market demand and sales go up or down. The more extreme examples are those that do most of their business at just one or a few specific times of the year. Most retail businesses, for example, experience a spike in demand during the holidays. Outdoor service businesses, such as landscapers in temperate zones, are often forced to occupy themselves with irregular odd jobs during the winter months.
In business, money is always scarce. Even if they could, businesses can’t afford to simply sit on large amounts of working capital. When times are good, there is always one more thing a business could be investing in to become more competitive, to drive growth, or to make itself more efficient. After all, there are always competitors battling to innovate their way to the top of any given industry’s food chain. Stopping to save up an emergency fund is much the same as simply stepping out of the race.
Every few months, another major data breach makes headlines, reminding us that cyber criminals remain a real and growing threat to businesses and private individuals. Despite these constant reminders, most businesses still have little or no protection from cyber security threats. As a result, the scale and frequency of cyber attacks has continued to grow in recent years.
Retail business in Australia have suffered from extremely low growth for years, with historic numbers of retail businesses going into administration every year since 2017. Low wage growth, a high cost of living in urban areas, high levels of debt, and a weak housing market are exacerbating the pressure that growing online sales were already putting on Australian retailers.
A growing proportion of businesses rely primarily on the Internet to operate, existing almost entirely online. Their workspaces, as well as their products, are often entirely digital. Many, and occasionally all of their suppliers and employees are likewise online, and exist as part of a much better connected global market than the physical world that most businesses function in.
Tech firms need strong cash flow management skills to thrive. While these kinds of manufacturers are seen in the popular imagination as overflowing with cash, the reality is that they face the same financial pressures as other businesses, plus a number of other potential complications. Not only do they rely on long international supply chains, but they also occasionally face astronomical costs without any prior warning.
Entrepreneurs often view online e-commerce stores as relatively easy ways to reach customers and build a profitable business. In actuality, online retailers face fierce competition and tend to be put into a difficult financial position by their very business model.
While Australia’s economy has enjoyed steady growth for over a decade, wage growth has not kept up. This wasn’t immediately a concern for the economy as a whole, but now the effects are beginning to show. Australia is in “per capita” recession for the first time since 2006. This means that the Australian economy is still growing, but the rate of growth is smaller than the growth of the population, so individual Australians are becoming poorer.
Keeping cash flow steady is a headache for businesses of all types and sizes. In many industries, the time between when a business needs to pay its bills and when the associated revenues come in is unpredictable. To keep the lights on, businesses need to constantly chase down clients for payment. Very few industries, however, suffer the kind of unpredictability faced by labour hire firms.