Work dries up for SMEs as slowdown hits

The rapidly slowing economy is hitting small businesses hard, with 20% reporting that their greatest concern at present is a lack of work.

The rapidly slowing economy is hitting small businesses hard, with 20% reporting that their greatest concern at present is a lack of work.

The latest Business Index from Sensis reveals expectations among small business owners have slumped to the lowest point in the 15 year history of the survey. The business confidence indicator currently sits at 25%, which is less than half the level recorded this time last year.

Finding quality staff, which has been the biggest concern for businesses over the last two years, is now only the fourth biggest worry. Money is at the front of business owners’ minds; a lack of work, the general economic climate and cashflow are now companies’ biggest concerns.

One in four businesses reported deterioration in profit since May.

The report also shows 14% of small businesses have reduced their workforce since May, with 30% citing a downturn in business or the closure of a business unit and 25% blaming economic conditions.

Report author Christena Singh says small businesses reported a lack of work or money is the main impediment to taking on new employees in the future.

But Singh says SMEs appear to be working hard to combat the impact of the slowdown, with 20% working to reduce costs in the last few months.

“Many businesses are taking a more aggressive stance, including advertising more, diversifying the business, seeking new business opportunities and developing new products in an attempt to attract customers,” she says.

Overall, 11% of small businesses are advertising more, 8% are diversifying business, 7% are looking for new business and customers, and 6% are adding new products or services.

The report also reveals support for the Rudd Government continues to slide, with almost 40% of respondents saying the Government’s policies work against small business. In June 10% of respondents said the Government’s policies support small business.

The state of the economy was the key reason small business has turned on the Government, followed by the perception there is too much bureaucracy and that interest rates are too high.

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