Welcome to the new financial year. It’s been a tough start to 2012, but I know that thousands of entrepreneurs are starting 2012-13 in a positive frame of mind, ready to chase new targets, new deals and new growth opportunities.
I know this because I have once again been inspired by the resilience of our community, which shines through in the latest SmartCompany-WHK SME Directions Survey.
Respondents to the survey of more than 500 SMEs told us that they are still aiming for solid growth in the year ahead, with revenue targets 10-12% ahead of last year (slightly lower than the revenue target of 15% growth from our December survey) and profit targets steady at 10%.
Hiring intentions also remain pretty strong, with just under 60% of businesses set to take staff on.
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And given the circumstances, I’d argue confidence in the economic outlook is pretty good too – 47% of respondents said economic growth would be steady, compared with 36% who are expecting negative growth.
But the survey, which is sponsored by Australia’s leading SME accounting firm, WHK, should be required reading for politicians and policymakers.
It suggest that anyone who thinks that Australia’s official GDP growth figures – which last month showed the economy screaming along at 4.3% – are representative of what most SMEs are seeing needs to take a closer look at what’s happening out there.
The survey reveals just how difficult a year it has been for most entrepreneurs, with just under 55% of respondents telling us they missed their profit targets for the first six months, with growing sales and cashflow named as the biggest hurdles.
Obviously, performance depends very much on the sector you are in.
The finance and insurance sector was the most bullish (with 72% of firms reporting sales targets met and 70% reporting profit targets met), with information technology also performing well (59% of firms said revenue targets met, while 58% said profit targets would be met).
However, the construction sector is clearly challenged (75% of firms missed sales targets, while 62% missed profit targets) and the accommodation, cafes and hospitality sector is struggling (57% of firms missed revenue targets and 71% missed profit targets).
The point is that conditions remain extremely patchy – far patchier than the Australian economy’s 4.3% growth rate suggests.
Hitting those revenue and profit targets set for 2012-13 – remember, we’re expecting 10-12% for revenue and 10% for profit – won’t be easy unless that mining-driven GDP growth filters down through the wider economy.
Indeed, it’s worth looking at the strategies SMEs will use to drive growth in the next 12 months – the focus is on doing more with less, rather than aggressively chasing growth.
When asked for their top growth priority, the majority of respondents will focus on improved business operations/efficiencies, which will inevitably involve a fair degree of cost cutting. This was followed by organic growth and growth through new products.
This is a marked change from the previous SME Directions survey, where entrepreneurs made organic growth and growth via new products their top priority, and suggests a new level of caution amongst business owners.
Thanks to everyone who participated in the survey and thanks to WHK for their ongoing support. We’ll be taking the pulse of the SME community before the start of every financial and calendar year – I am already looking forward to seeing how you are all travelling in December.
Download the free eBook 10 Insights from the SmartCompany-WHK SME Directions Survey to learn:
- Which industry is most bullish about the outlook on the economy
- The tax changes SMEs have prepared for
- The full SME worry list