More than ever, small and medium businesses play significant roles in the Austrian economy, with 97.4% and 98.4% accounts of all companies. In 2018-2019, Australian startups and small-and-medium-sized enterprises (SMEs) contributed over 32% of the Gross Domestic Product (GDP) with a whopping $418 billion annual revenue.
Despite having all the risk factors, lower survival rates and volatile revenues- small businesses now have higher survival rates and a more promising future. This is because many government and non-profit agencies are coming forward to help small businesses and startups with lucrative funding’s and financial aids. Additionally, fundraising through TikTok and similar websites has given some small businesses the ability to brand their products and raise money for improvements. Using advanced methods to buy TikTok views, many can popularize their startup ideas until they can stand on their own.
How and why fundings are crucial for small businesses? Here are 10 common reasons why SME businesses look for funding opportunities.
1. Employee Recruitment and Retention:
Recruiting and retaining skilled, competent candidates is incredibly crucial for any business, but small enterprises require extra attention. A team of qualified, trained, driven, and devoted employees maximise productivity and help small businesses grow, expand, and innovate exponentially. However, employee recruitment programs require direct access to adequate working capital to invest in recruitment adverts, interviews-assessments, employee remuneration and other associated expenses each month.
2. Training and Development:
Employee training and development programs directly contribute to furthering employee knowledge, skills most importantly, solid employee loyalty- making them valuable assets to small businesses. Small businesses can also leverage organic growth and competitive advantage against bigger industry competitors with these loyalty programs. Sadly, many startup businesses skip over this essential employee development phase due to the lack of capital that leads to losing promising employees and struggling to build a reliable, sustainable workforce for the long run.
3. Advertising and Promotion:
Small businesses struggle to source customers or client projects without smart advertisement and promotional strategies and implementation. So although advertising and marketing schemes are the primary concern for any startup and small enterprise to draw attention to potential leads, collect valuable customer data with transformative returns- small businesses often lack enough capital to run promotional campaigns that can set them apart from their competitors. Hence, many early-stage or emerging SME business owners seek government funding to mitigate future uncertainties and foster brand visibility and awareness.
4. Cash Flow Management:
Accurate cash flow management, having full control over the money earned and spent within your business, follows all-important business plans and decisions. Precise cash flow management also helps small business owners to determine business performance and develop effective business forecasting, which most SME businesses and startups have a tough time achieving at the beginning phase. That is why companies look for a secure way to track their finances, pay taxes and cover debts without disrupting the business operations.
5. Market Expansion:
After an initial couple of years of launching and streamlining business operations, small businesses start focusing on emerging their business activities and expanding the market. But unfortunately, the most common reason why small companies fail to expand along with faulty business models, poor inventory management or marketing initiatives is the lack of funding. Business owners often know how much capital is needed to implement their business expansion plan but are unaware of the possible risks and financial jeopardy.
6. New Product/Service Release:
These days, it is essential for small businesses to continue to evolve with time, be innovative and stay relevant in the market- regardless of the industry. In other words, the business workforce team has to keep themselves updated with the newest trends, demands, functionalities before designing a new product or service idea. But, unfortunately, while the speculative ideas can be ingenious or even groundbreaking, many businesses fail to launch new products due to the lack of enough internal resources, proper machinery without exceeding the monthly cost margin, or refinancing existing loans. So business owners and enterprises apply for government business growth grants to develop new products and keep the overall business operation afloat.
7. Machinery, Equipment and Logistics:
High-end machinery, leading-edge technologies and equipment are considered the assets of any small company, especially to gain warranties and vendor support. Machinery, technology equipment or even powerful software can help a business minimise labour-forced operations, data safety while maximising productivity. Despite having many advantages, many small companies hesitate to make such staggeringly high investments, risking the underlying financial breakdown. Small business grants the government availed generally cover all the purchase and installation costs, reducing the chance of losing an astronomical sum of money without any prospects but rather introducing a new range of services.
8. Inventory or Sourcing:
Having full control over all the business operations is crucial for all businesses but often difficult to achieve in small businesses. With minimum capital and resources, keeping the company functional becomes quite a challenge itself. While smart and calculated inventory management allows business owners to make more forward-thinking business directions, increase revenue and boost customer retention with real-time sales information and performance data, insufficient inventory can turn away potential clients and prospects. Before getting to that point, most small business owners apply for business grants to stock inventory and focus on checklist and distribution KPIs.
9. Tax Payments:
Every business, at one point in its life cycle, gets into tax-related problems. But small businesses can greatly be affected by tariffs, as the companies mostly rely on cash flow to pay daily expenses. Local, federal and state tax payments with extremely rigorous processes and strict regulations only compound the cash-flow management issues. Business grants and funds give business owners, and entrepreneurs fast and secure access to cash with advantages like cash deductions.
10. Logistic Support:
Logistic support is the key element to any efficient supply chain management of a business that directly translates to higher production rates, better inventory control, increased production, warehousing space, shipment, and all-in-all improved customer and supplier experience and satisfaction. Logistics play a huge role in boosting sales and revenue of any business, especially in small enterprises, as customers, suppliers, and distributors are initially dubious about the business operation itself. However, the entire process of productions, sales and integrated logistic support require a hefty sum of capital most small businesses can barely afford. Business grants can mitigate any logistic and supply chain issue within traditional and modern business models.
To sum up
Every business operation is challenging in its own rights. But even with thorough research and industry expertise, it’s nearly impossible to set financial objectives for startups and small businesses without capitalising on the business initiative’s long-term survival and sustainable growth and credibility. Small business funds and business growth grants allow small business owners and entrepreneurs an opportunity to meet the business world standards and develop a credible, constructive business model to be a part of a business grant program and the road to foreseeable, quantifiable success, innovation and expansion.