The good news is business confidence is on the rise for Australian SMEs, however consumer confidence is in decline. Moreover, cashflow remains a problem. This article will shed light on research highlighting the latest trends for Australian SMEs for 2017.
1. SMEs’ business confidence
Many SMEs are confident about the future, this is supported by NAB’s New Moments that Matter – understanding Australian SMEs whitepaper and The Sensis Business Index. They had staggering findings that SMEs were more confident over the past three-month period than they have been in the past six and a half years. We are seeing the majority of SMEs in Australia feeling successful in business, which is strongly correlated with their broader outlook on life; 86 per cent of those who feel successful in business feel successful in life.
Furthermore, Australia is a prosperous country to do business in and SMEs here are thriving with strong business conditions – 71 per cent of those SME’s believe that Australia will be a great place to run a business in future. Also in amongst business confidence trends we are seeing that SMEs are also more likely to be focused on growth and technology. Almost half, 45 per cent, intend to grow their business in the next three years while 1 in 10 are already in a constant state of expansion. Technology is an important area to aid future development and business growth and SMEs are understanding this by making sure to keep up with new technological advances affecting their own business.
However, despite SMEs being optimistic about the future, Scottish Pacific’s SME Growth Index for March 2017 found that more than 90 per cent of businesses were unhappy with cashflow. Dun & Bradstreet suggest that capital investment expectations Australia-wide were higher for the second quarter of this year compared with the prior two years, so what’s driving this trend? According to Scottish Pacific’s SME Growth Index 65 per cent of SMEs claimed credit conditions and credit availability were essential barriers to growth. This inhibited access to finance could damper SMEs investment intentions this year, making it difficult to capitalise on marketing opportunities and therefore limiting any expansion plans.
Also affecting cashflow is the fact that SMEs are feeling the pressure given competition is fierce in their sector. Competition was also listed as a key barrier to growth, where almost a third of SMEs indicated they wanted to expand but didn’t, identifying too much competition as a key reason for not doing so. This competition affects cashflow impacting profits with over half, 52 per cent, believing it’s hard to stand out among their competitors in their sector.
3. Consumer confidence
Consumer confidence is low. According to a recent Dun & Bradstreet business expectations survey, it was suggested that 42 per cent of organisations were concerned with Australian consumer confidence in 2017. In addition, the Sensis Business Index found decreasing sales, which can become a severe business liability.
Australian SMEs are facing both positive and negative implications in 2017. SMEs confidence is high; however, consumer confidence is low. Cashflow and competition is a major trend that will inhibit SMEs expansion and growth, but there is light at the end of the tunnel as SMEs keep up to date with technology their expansions and optimism remains positive for the future.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.