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With more than half of SMEs finding Christmas a strain on finances, when combined with impending extreme weather, it means SMEs will need brokers more than ever this summer, according to an SME lender.
A survey of 300 SMEs conducted by Honeycomb Strategy for OnDeck Australia has found that 55 per cent of small and medium enterprises (SMEs) have been negatively affected by past major calendar events, such as Christmas.
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According to OnDeck, major calendar events are not always lucrative for small businesses, with the top five negative outcomes being:
- Loss of revenue (41 per cent);
- Slowed or halted normal business operations (41 per cent);
- Delays in the delivery of products or services (22 per cent);
- Increased costs (20 per cent); and
- Loss of customers to competitors (13 per cent).
As such, more than half (57 per cent) believe that access to cash flow would help their business navigate the disruption.
Given the holiday season is fast approaching, finding fast access to funding is “critical”, the lender said, outlining the need for brokers to help support SME clients.
Cameron Poolman, CEO of OnDeck Australia, said: “Many small businesses are still in recovery mode from COVID. But on the plus side, consumer confidence is currently at a 10-year high, and the 2020 festive trading season is expected to be big, so the next few weeks offer a much-needed chance to make up for some of the revenue lost in 2020. But SMEs need fast access to cash flow funding to manage the additional costs of the season.”
“Right now, SMEs need access to cash flow support within days – not weeks...
“This is also a valuable opportunity for brokers to maintain, and grow, their own revenue by diversifying into small-business loans during what can be a quieter season in the home loan market,” he said.
“As we head towards the end of the year, this is an exceptional opportunity for brokers to step into the commercial lending market and hit the ground running in 2021 with an expanded service proposition,” he concluded.
Severe summer weather compounding SME threats
Additionally, OnDeck said the need for brokers is critical at this time of year given the impact of extreme weather on small businesses over summer.
OnDeck’s research found that nearly half of SMEs (48 per cent) had been impacted by bushfires and smoke last summer, while more than a third had been impacted by drought and water restrictions, and 31 per cent had been affected by flooding or cyclones.
Moreover, more than half of SME respondents anticipate to be impacted by bushfires in the months ahead, with two-fifths concerned about the effects of drought and water restrictions, or flooding.
Mr Poolman commented: “We know that 57 per cent of SMEs say access to cash flow would help them prepare. But when extreme weather events strike, businesses don’t have the luxury of time.”
He therefore highlighted this as an additional “opportunity for brokers to add value to the client relationship by having important conversations with their SME customers around preparing for extreme weather events”, and “reassuring clients that their broker is the go-to expert for access to cash flow when funds are needed in an emergency”.
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