Small to medium-sized businesses are optimistic about better business conditions in the lead-up to the new financial year, according to the Commonwealth Bank’s SME Confidence Report.
The research found an increase in revenue and profit is expected by Australian SMEs in the next six months. Fifty per cent of respondents said they expected revenue growth, while 46% said they expected a growth in profits.
The overwhelming majority of SMEs surveyed said they expected trading conditions to improve or hold steady in Australia, with only 11% saying they expected the economy to decline.
Adam Bennett, executive general manager of local business banking at the Commonwealth Bank, says most businesses are confident about the new financial year for a variety of reasons.
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“These findings indicate SMEs are optimistic the Australian economy will continue to gather momentum, with almost 90% of businesses expecting conditions to either improve or remain steady over the next six months,” he said.
“Overall economic conditions look largely positive, with strong employment growth, low interest rates and a healthy housing market supporting improving business confidence and spending patterns.”
The research also looked at the key factors which could prevent SMEs from achieving growth in 2014. The most common response was meeting customer needs (61%), followed by cash flow management (58%) and staff management (56%).
Tim Reed, chief executive of MYOB, says when we talk about small business confidence we’re actually discussing the mindset of one to two million people.
“But there are some common threads,” he told SmartCompany. “The first is we are seeing the continued impact of lower interest rates and confidence that they are going to remain low for a period to come.”
Reed says the Australian dollar has also had an impact on business confidence, with a low Australian dollar allowing SMEs to compete with overseas companies. But he also says many small businesses have set themselves up for good trading conditions over the past five years or so.
“I do think we’re partly seeing the fruits of the continued attention and ingenuity of Australian small business owners,” he said.
Attitudes towards the federal government have also played a part, says Reed.
“Small business owners feel the federal government understands the role they play in the economy and the pressure they are under.”
Earlier this year the Coalition promised to cut red tape for businesses by scrapping more than 9500 pieces of legislation.
A recent study by MYOB found that six months after the 2013 federal election, satisfaction with the federal government among SMEs was at its highest level since 2009.