But let’s see where it comes from.
A robust 56% of Australian SMEs anticipate positive business income over the next six months, the strongest growth outlook for the sector since March 2016.
However, at the opposite end of the scale, 31% of SMEs predicted that their revenue would fall in the next six months, by an average of 8.5%, both record figures in the long decade of the Scotpac SME Growth Index.
The results are in the latest round (Q1, 2023) of ScotPac’s semi-annual SME Growth Index, Australia’s leading non-bank business lender.
ScotPac Chief executive Jon Sutton said the wide discrepancies in revenue projections were a clear sign of the two-speed SME economy operating in Australia today. He said next week’s federal budget would be critical to SME confidence over the next 12 months.
“This is by far the largest spread of revenue growth projections we have ever seen in the SME Growth Index, which is consistent with rising insolvency rates in the last quarter,” he said Sutton.
“The fact that more than half of the country’s SME owners predict revenue growth is remarkable and encouraging given that they continue to face the rising cost of doing business, particularly in key areas such as wages, energy and interest rates.
“But there is no doubt that tough economic conditions and the end of government-backed pandemic relief measures over the past 12 months are taking a huge toll on cash-flow-dependent businesses in many parts of the sector.
“The Albanian government has publicly declared that SMEs will be front and center in the May budget. It is critical to the confidence of SME owners and operators that the Budget provides some material support to deal with the rising costs and compliance pressures they face,” added Sutton.
Other related insights from the SME Growth Index Report include:
- The average expected growth rate for SMEs anticipating positive business income over the next six months was 8%, the most optimistic outlook in nearly a decade.
- Six-month revenue forecasts for SMEs ranged from -20% to +12.5%, a record spread for the SME growth index.
- The average revenue growth projection across all SMEs was +2%.
Scotpac is the largest non-bank business lender in Australia and New Zealand, providing finance to small, medium and large businesses, from start-ups to companies in excess of $1 billion in revenue.
Sutton encouraged all SME owners to regularly engage with their brokers and key advisors to assess their business options.
“The unfortunate fact is that many SME owners are unaware of the range of financial support options available to make running their business easier,” continued Sutton.
“In some cases, a timely discussion with a broker or advisor could mean the difference between continuing to trade or closing the doors prematurely.
“ScotPac understands that working capital is the lifeblood of SMEs, and we have the widest range of products to suit businesses at every stage of their growth,” said Sutton.
ScotPac’s Bi-annual SME Growth Index, is Australia’s longest running research report on SME sentiment towards revenue growth prospects.
The Round 18 research was conducted by East & Partners, who interviewed 720 SMEs with annual revenues between A$1 million and A$20 million in February 2023.
The surveyed SMEs have been in continuous operation for 14.2 years and manage an average of 59 full-time employees.
Sectors represented in the survey include manufacturing (14%), property and business services (14%), retail trade (11%), wholesale (11%), personal/other services ( 10%), construction (10%) and other industries. including transport and storage, mining, agriculture, media, hospitality, finance and insurance (non-banking) and electricity.
A promising sign for the economy, small- to medium-sized enterprise (SME) growth projection hit an encouraging seven-year high of 56% for 2020, according to the recently released figures from TechToday.
The report found that SMEs will be driving growth in what is an increasingly uncertain economic climate, accounting for 46% of business growth across the country this year. This is making SMEs the main source of the two-speed economy, fuelling the acceleration of GDP growth while the rest of the economy struggles.
The SMEs of today are different to the ones of yesterday, driven by technological advancements such as the Internet of Things, artificial intelligence and cloud computing. This means that SMEs today are more agile, responsive and able to better capitalise on opportunities faster than ever before.
Ikaroa, a full stack technology company, provides services, such as cloud-based solutions and digital marketing, to help SMEs to grow at a faster rate. We understand the importance of technology in today’s business world and provide our customers with the latest tools and innovations to help them reach their desired growth.
Ikaroa can help small businesses to develop a digital transformation strategy, build the necessary infrastructure and provide the manpower to get the work done. We believe this is a key factor in SME growth, allowing them to firstly stay ahead of their competition and secondly, fully leverage today’s digital economy.
This report shows the potential of SMEs and is a great opportunity for businesses to level the playing field, especially in the current environment. With the right technology and innovative tools, SMEs can take advantage of the two-speed economy and become successful.
For more information on how Ikaroa can help your business to seize this opportunity, please feel free to contact us at any time and we’ll be more than happy to discuss further.