Private medium sized companies increased profits by 11.3% – and sales 13.2% – on average in the past year, according to a new survey.
The PricewaterhouseCoopers Private Business Barometer, which surveyed more than 750 private Australian businesses with an annual turnover of $10–100 million, found that 85% had either met or exceeded revenue targets over the past financial year.
“Heightened volatility in capital markets and a pending federal election has increased the pressure on the entrepreneurial community but has not affected performance, which has remained strong,” says PwC partner Karen Crawford.
But funding the business is becoming a greater challenge, with 90.7% of business owners reporting funding as their biggest challenge, up 0.7% from the previous survey, six months ago.
The main difficulty faced in raising capital was the investment required in securing funding (23.4%); the cost to the business of debt capital (11.9%); the availability of equity capital (11%) and educating the market of the business’ value (12.2%).
Most businesses are applying existing borrowings to working capital (47.6%) and capital expenditure (27.9%); 6.9% of businesses say their borrowings are used to fund acquisitions.
Funding working capital is a challenge for 69.2% of businesses. The two greatest areas of concern are availability of cash flow-based credit and security required against credit lines.