“Scrambling to make a profit”: What’s keeping business owners up at night?
Friday, December 14, 2018/
The verdict is in from SmartCompany’s annual reader survey and cashflow is once again the biggest thing keeping business owners up at night. No surprises there.
Of the 613 respondents to this year’s survey, 53% said cashflow was worrying them the most, followed by competition (31%), and cyber security threats (24%).
It’s easy to see why: cashflow is the biggest reason companies go broke, competition is heating up in large sectors like retail and poor cyber security has emerged as a costly epidemic among SMEs.
But it’s a long tail, as tax obligations (21%), wages (18%), policy changes (17%) and telecommunications (12%) are also on the minds of a significant portion of business owners.
What do readers think? It’s a mixed bag, but the general theme is concern about the election next year, and all the uncertainty that goes with it, as well as worrying industry trends (read: retail) and tech and digital disruption.
Beneath that there’s also a more general feeling things are getting more complicated and harder to control. Keeping up in the world of modern business is a concern less material than cashflow, but nevertheless, it appears to be hanging over the heads of many respondents.
One businessperson described it as an “old board set in its ways and not seeking to reinvent the business” with “management not taking feedback on board”.
“We are scrambling to make a profit each year and even though it is getting harder, we are finding new and more innovative ways to generate income, but do not know for how much longer,” another entrepreneur said.
Automation, technology changes, artificial intelligence, and digital marketing where also common themes contributing to the feeling the world is passing them by.
Business owners are getting on with the job in droves though — 46% of respondents intend to invest in technology over the next year, while 34% say they will invest in R&D or new product development.
A smaller proportion (21%) or seeking advice or professional development, suggesting they’re still trying to make heads or tails of things.
Others have a decidedly more … pessimistic view.
“Bedding down offshoring resources, potential tax changes if Labor wins the federal election,” one business owner said.
“Stagnant consumer wages vs rapidly rising costs. political uncertainty until the election. falling house prices. credit squeeze by banks. the incoming government will make decisions that harm the economy. rising unemployment as the economy tanks rising prices on everything due to exchange rates,” another owner said, summarising all their concerns.
There are plenty of businesses concerned about the election though, and what Labor’s proposed changes to industrial relations laws will mean for them.
It’s not all bad, and Labor have said they’re going to be making some SME-focused announcements in the new year, but the prevailing sense of uncertainty is a cause for concern.
More than a third (36%) of respondents will avoid making strategic financial investments over the next 12 months, while 28% are unsure. Only 35% feel like now is the time to invest.
Given Australia’s economy is continuing to grow, and unemployment is falling, that itself is a fairly stark assessment of confidence.
Our next question gives a clue as to why though. Over half (54%) of respondents said their investment will be self-funded, while only 30% said a business loan is feasible.
The banks, particularly after the royal commission, aren’t playing ball, and this was a clear issue for respondents.
There’s help on the way in the form of a $2 billion securitisation fund commitment from the Coalition though, but details on the plan are scarce and the government’s ability to push through major legislation before the election is tenuous.
For those that are investing, priorities include implementing better systems for remote access and collaboration (44%), IT security upgrades (40%) and better hardware (36%).
Overall, however, business owners that responded to the survey are relatively optimistic about the year ahead, with 89% saying they either expect to grow or at least remain stable in 2019.