Australian SMEs have shrugged off a difficult year and set their sights on posting revenue growth of 10% and profit growth of 15% in 2012, according to the inaugural SmartCompany-WHK SME Directions Survey.
But while the suggested SMEs have a high degree of confidence in their own businesses, they were far less confident about the state of the Australian economy, with 43% of the respondents expecting conditions to remain steady and 35.5% expecting the economy to go backwards.
Just 15.5% were expecting economic growth of any kind.
The survey of over 600 members of the SmartCompany community, which was sponsored by WHK, Australia’s leading accounting and financial planning firm for SMEs, underlined just how difficult 2011 has been for many entrepreneurs.
According to the survey, 54.6% of respondents missed their revenue targets, while just over 60% missed their profit goals.
Given these challenges in 2011, it is not surprising that most businesses have cautious growth plans for the year ahead.
Just over 41% of entrepreneurs nominated organic growth as the key strategy they would employ to reach their sales and profit targets, while two other internally-focused strategies – improving business operations/efficiencies and improving pricing/margins – were popular.
Happily though, the SME community continues to innovate – the second most prominent strategy is growth via new products.
The underlying sense of confidence of respondents in their own business is demonstrated by their hiring intentions. Despite concerns from some economists about the threat of rising unemployment, 60.5% of respondents said they planned to hire in the next 12 months.
The IT sector has the strongest hiring intentions (70.2% of firms intend to take on new staff) with education, telecommunications and businesses in the internet sector also keen to hire.
One thing these businesses won’t be looking for is help from the banks.
Given the cautious growth plans the respondents reported, it is not surprising that demand for funding is low, with just 35.1% of firms reporting they will take external funding.
But of the group that does need funds, banks are very much on the nose, with new investors and existing investors preferred to traditional bank debt.
One change that continues to occur in the SME sector is around business planning. As we saw from the companies in the Smart50, a sort of two-tier planning system now exists in many businesses, where long-term business plans are made, but these are then regularly reviewed.
This was confirmed in the SME Directions Survey. Active business plans generally stretch a maximum of three years, 36% of respondents reporting these plans are reviewed quarterly.
To find out more about the survey, you can download our free eBook, 10 Insights from the SmartCompany-WHK SME Directions Survey. Just click here.