By Aimee Chanthadavong
There has been a dramatic slump in business confidence among Australian SMEs after business owners were hit with triple whammy of interest rate hikes, higher fuel costs and ongoing uncertainty over tax reforms, a survey has revealed.
The MYOB business monitor, which surveyed 1,000 small to medium Australian business owners, found that more than half of Australian SMEs believe an economic recovery is more than 12 months away, which is up from 37 per cent in April 2010.
The recent spate of natural disasters is very likely to impact on future business performance. More than half of Australian business owners say that they expect that the floods that devastated areas of Queensland and Victoria will have an impact on their business over the next 12 months.
Despite this, CEO MYOB Tim Reed told RetailBiz there is still determination in businesses to perform their best.
“One of the greatest things that comes from this is businesses continue to show their optimism and that businesses owners are resourceful. Businesses are feeling under pressure particularly because the economy is not performing but they are still expected to drive revenue growth in their own business,” he said.
“To take responsibility to do that and drive that forward came from over 50 per cent of respondents who said they intend to grow their customer number and revenue in the next 12 months as opposed to 10 per cent that say they will work on mitigating and making up for their losses.”
Looking specifically at retailers, the MYOB business outlook reported that when comparing revenue at the present time to a year ago, retailers are not trading as well as other businesses with just 23 per cent reporting an increase in revenue compared to 26 per cent of all SMEs.
But, when looking at the retail pipeline of potential orders and activities to drive revenue over the next three months, retailers are more optimistic than other SMEs with 42 per cent saying they have more than a normal amount of work, compared to 32 per cent for all SMEs.
When considering where business owners see where their revenue is today versus where they think it will be in 12 months time, retailers have a very similar set of expectations to other SME owners with 42 per cent believing revenue will be up compared to 41 per cent for all SMEs and only 17 per cent think it will be down compared to 14 per cent for all SMEs.
“It has been a difficult past year for retailers with 20 per cent more saying revenue has decreased over the past year than those that say it has increased. This is much greater than SMEs overall,” Reed said.
“Retailers, however, remain optimistic with more reporting an expectation in improved trading conditions over the next 3 months compared to non-retail SMEs. When we look 12 months out retailers share the same optimism as all SME business owners, with more over 40 per cent expecting to see revenue increasing – twice the number that expect it to decrease.”
Reed highlighted that retailers that were performing the best had an existing online presence.
“One of the things that we can take from this is that a business needs to invest in their online capabilities in terms of a website and or providing customer service capabilities like shopping cart or checkout system,” he said.
“I would say it’s important to have a website. Our studies show that two thirds of consumers are looking for a business search online but only a third of businesses have a website, so that means two thirds remain hidden online searches.”