Businesses less than two years old saw better revenue growth and greater confidence than more established small businesses, according to a survey.
New research from accounting software provider MYOB found that 36% of start-ups saw revenue gains, compared with 18% of SMEs in the year to February. Small businesses also reported a higher rate of declining revenue, 39%, compared with start-ups at 27%.
James Scollay, business division general manager at MYOB, told StartupSmart the survey was a health check on the start-up and small business sector, and that the good news reached beyond just the business owners themselves.
“It’s very encouraging and great news for the economy to see more start-ups positive and growing,” Scollay says.
Start-ups were more confident about the coming year, with 42% expecting to generate a revenue increase, compared with 30% of small businesses. Only 17% of start-ups expected a fall in revenue, compared with 18% of small businesses.
Scollay attributes the performance and cultural difference between start-ups and older small businesses to a new wave of Australian businesses.
“When you correlate the different factors in the survey, the use of technology and the way the start-ups work is different. They’re using more innovative techniques and technology and seeing greater business success,” he says.
Scollay added the start-ups surveyed were far more likely to be using online opportunities to promote and sell their products and services, use teleworking and flexible work opportunities, and cloud-based services.
Scollay says the fundamentally different way of working was likely to continue to favour these start-ups as they grow and mature.
“It will be interesting to monitor how they do, but if their existing trajectory and outlook for the future is anything to go by, then this is a segment of the business community that’s likely to do very well,” he says.
The survey found start-ups worked fewer hours than their small business peers. The average reported working week for a start-up was 39.7 hours, compared to 40.6 hours overall. Just over a third of start-ups, 37%, worked 40 to 60 hours a week, and 13% worked more than 60 hours a week.
The research released this week as part of the Business Monitor Survey also found start-up owners’ key concerns are managing cashflow and attracting new customers.
The majority of start-up owners, 73%, said reaching and converting new customers was a challenge, with 9% saying it was an extreme pressure.
On cashflow, 71% say it’s a pressure they face.
Scollay described this as unsurprising for a new business, but the focus on attracting new customers was good news.
He added the thriving start-up scene would benefit from big businesses understanding their needs and packaging their products appropriately, and from government re-assessing the considerable amount of compliance and legislative red tape.
“Australia is a hugely entrepreneurial economy fuelled by two million small businesses, and we do think government and large business can do more to help these businesses thrive.”