The single most important takeaway for small business owners grappling with debt is this: early intervention is your strongest tool.
When your small business is dealing with mounting debt, it’s tempting to wait and see if things improve on their own. Spoiler alert: they won’t. In fact, waiting too long to tackle debt is one of the fastest ways to limit your options and dig yourself into a deeper financial hole.
The good news? There are tools and strategies designed to help you get back on track—if you act early. From debt restructuring to the game-changing Small Business Restructure (SBR) process, knowing what’s available could make the difference between saving your business and watching it sink. Let’s break down why taking action now is the best move you can make. According to recent data from Australian debt restructuring start-up AVA Advisory, nearly 40% of small and medium-sized enterprises (SMEs) are actively seeking help or better advice to navigate their debt challenges. However, the research also shows a concerning gap in awareness of the solutions that could help these businesses recover. In fact, 34% of SMEs admit to being unaware of common debt solutions, leaving them exposed to missed opportunities and, in some cases, unnecessary financial distress.
With debt management more critical than ever, business owners may feel like they’re stuck between a rock and a hard place. Many SMEs are still recovering from the aftershocks of COVID-19 and dealing with the persistent economic headwinds that are now a part of the post-pandemic landscape. This is why knowing the right debt solutions, like the Small Business Restructure (SBR) process, could be a game-changer. Despite its effectiveness, many business owners aren’t familiar with these options and could end up missing out on the very tools that might save their business.
In this article, we’ll dive into why debt solutions like the SBR should be on every small business owner’s radar, even if they’re not currently facing major financial trouble. By understanding these options, SMEs can better prepare for the unexpected, avoid falling into deeper distress, and ultimately turn their financial situation around.
Taking action before it’s too late
The single most important takeaway for small business owners grappling with debt is this: early intervention is your strongest tool. Whether your business is already in financial trouble or you simply want to be ready for unforeseen challenges, acting early gives you more control over the outcome. Procrastinating or waiting for the problem to resolve itself only narrows your options and increases the likelihood of a crisis.
Seeking advice from a qualified professional—be it a financial advisor, tax agent, or debt solutions specialist—can illuminate paths you might not even know exist. These experts can provide a clear understanding of debt management options tailored to your business’s specific needs, helping you avoid cash flow crises and unnecessary stress.
“Professional advisors can help business owners understand how to manage their debt before it spirals out of control,” says Andrew Quinn, CEO of AVA Advisory. “The key is to take action sooner rather than later. Waiting until the situation becomes dire can limit your options and make it harder to recover.”
Crucially, many business owners mistakenly see insolvency as the end of the road. However, that’s often far from the truth. With proactive steps, even businesses facing significant challenges can find pathways to recovery. Solutions like the Small Business Restructure (SBR) process allow viable businesses to reorganize debt and continue operating without resorting to liquidation.
Each business is unique, and no single solution fits all. That’s why understanding the full suite of available tools—whether it’s refinancing, restructuring, or private lending—is vital. By embracing early intervention, you don’t just give your business a fighting chance; you gain the power to navigate financial turbulence with confidence and clarity, knowing that recovery is possible even in the face of daunting circumstances.
Why many SMEs are struggling to manage debt
The findings from AVA Advisory are eye-opening: 38% of SMEs in Australia know they need help to manage their debt, yet a substantial 34% aren’t even aware of common debt solutions available to them. This lack of knowledge is a problem because it leaves businesses vulnerable to making poor financial decisions or missing out on critical opportunities for proactive debt management.
While some businesses are actively seeking advice, others are under the misconception that there are limited solutions available to them. Many owners have heard of formal insolvency options like voluntary administration or liquidation, but fewer are familiar with more strategic debt restructuring solutions. Tools like refinancing, debt restructuring, or private lending could be exactly what’s needed to get a business back on track—if only the business owner knew about them.
Andrew Quinn, Founder and CEO of AVA Advisory, explains that many small business owners are struggling to find the right advice for their specific needs. “Nearly half (18%) of those seeking advice still need better or more tailored solutions,” says Quinn. “This suggests that some businesses don’t know where to turn or are simply not aware of all their options.”
A lifeline for struggling SMEs
One of the most promising yet underutilized options for struggling businesses is the Small Business Restructure (SBR) process. Designed for businesses with liabilities under $1 million, the SBR provides a simplified way for companies to restructure their debts and continue trading, rather than face liquidation.
Despite growing awareness, the SBR is still relatively unknown to many SMEs. Only 37% of businesses have heard of it, even though the process has been gaining traction since its introduction. The SBR is a perfect example of a solution that could help struggling businesses avoid liquidation, but if business owners aren’t aware of it, they risk missing out on this critical tool.
“The SBR is designed to help viable businesses that are facing financial distress,” explains Quinn. “It’s an alternative to liquidation and a way to restructure debt so the business can continue operating, rather than shutting down. For many businesses, it’s a way to avoid insolvency and get back on a path toward recovery.”
Why awareness of debt solutions is critical
The gap in debt solutions awareness is a serious issue. Without knowledge of the options available, businesses are left exposed to financial distress, often waiting too long to take action. As Quinn highlights, “Businesses without a clear understanding of their debt management options are more likely to let problems escalate until the situation is dire, and by that time, their options may be severely limited.”
This is especially concerning for businesses in the post-pandemic economy, where economic uncertainty remains high. Business owners can no longer afford to wait until their debts become unmanageable before seeking help. By acting early and seeking professional guidance, SMEs can avoid the worst-case scenario—going into liquidation with no options left.
Navigating the economic headwinds
It’s important to recognize that the economic challenges businesses are facing today are not the result of mismanagement but of unprecedented global events, such as COVID-19, and ongoing economic turbulence. For many SMEs, this means working harder than ever to maintain financial stability while dealing with shrinking margins and rising costs. According to AVA Advisory’s research, 55% of SMEs are making a conscious effort to keep creditors satisfied by paying on time, but that doesn’t always guarantee they’ll avoid financial distress in the long term.
Despite these efforts, the economic environment is tough for everyone, and debt can pile up quickly. For SMEs, taking proactive steps to manage their finances, like understanding the full range of debt restructuring options, could be the difference between keeping the business alive and having to shut the doors.
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