Small and Medium Sized Enterprises (SMEs) play an important driving role in the Australian economy, creating more than 7 million jobs. Fortunately, recent research suggests that Australian SMEs are experiencing promising growth, and business owners are feeling confident. However, some challenges to growth remain.
This article explores the key positive and negative trends for SMEs in Australia in recent years. We outline some of the challenges that SMEs in Australia are still facing, and look at how these businesses might look to overcome these hurdles in future.
How was 2017?
A recent whitepaper by NAB,Moments that Matter: Understanding Australian SMEs, has demonstrated that business confidence among many SMEs is exceptionally strong this year. Specifically, 73 percent of these SMEs polled feel confident about their business, which may be correlated with the fact that 83 percent also felt confident about their life in general.
An Eye for Growth
The research from NAB also suggests that Australian SMEs feel optimistic about growth. In fact, 45 percent suggested that they intended to expand in the next 3 years, while the remaining businesses were already in a state of expansion.
Similarly, these businesses were optimistic about the increase in revenue and profitability as key components of growth. Specifically, a huge 68 percent predict that revenue will expand over the next three years, while 65 percent predict that profitability will likewise increase during the same period.
Competition, Consumer Confidence and Cash Flow
Despite this overwhelming confidence among Australian SMEs, there are still challenges that remain that could inhibit growth. Particularly, competition is fierce among SMEs, and this has created a real challenge to growth for some businesses.
In the research by NAB, it seems that the threat of competition is weighing heavily on the minds of business owners. In fact, 54 percent of those polled suggest that competition in their sector has put a significant strain on their profitability.
Although business confidence is high, we are also finding that consumer confidence is lacking. For example, a recent Dun & Bradstreet business expectations survey found that a significant 42 percent of SME owners are concerned about consumer confidence for the year. Similarly, the Sensis Business Index identified that the most common problem mentioned by SMEs in Australia was decreasing sales.
A good way to get full oversight over how well your business is doing in terms of sales trends and profitability is to download inventory software. Downloading inventory software will enable SMEs worried about decreasing sales to see what they are doing right and where changes might be necessary. Downloading inventory software is also a great way to increase efficiency, and it should free up time for focusing on productivity and profitability.
The same Dun & Bradstreet research revealed another persistent challenge faced by Australian SMEs was cash flow. In another study by the Scottish Pacific's SME Growth Index for March 2017, a whopping 90 percent of business owners expressed concerns about capital investments and cashflow. Likewise, 65 and 61 percent of SMEs cited credit conditions and credit availability as two key barriers to growth. These statistics suggest that, while SMEs may be feeling confident for 2017, there are still multiple challenges to be overcome in order to maintain growth and expansion.