Australia’s small business fraternity are firing on all cylinders. But what does the future hold for this dynamic sector? It can be difficult for small business owners to know – in fact, the only constant in business is change.
Despite this, small business confidence is strong, with 57 per cent of businesses now confident in their prospects over the next 12 months, according to research by Sensis.
Overall, 22 per cent of businesses expect an improvement in the economy in the next 12 months.
Metropolitan businesses are feeling somewhat more confident (58 per cent) than their regional counterparts (52 per cent), with 52 per cent of SME owners and managers expecting significant or moderate expansion in the coming 12 months, the latest Sensis Business Index shows.
Revenue growth predicted
The September 2019 SME Growth Index – surveying more than a thousand businesses with annual revenues of $1-$20 million – shows a two-and-a-half-year high in revenue sentiment among SMEs.
It revealed that more than half (54.6 per cent) expect revenue growth for the back half of 2019, predicting an average 5.1 per cent revenue increase. Improved cash flow was also reported by regional SMEs and 54.3 per cent of city-based small businesses.
Many small businesses are buoyed by the prospect of future growth, with one in 10 in a constant state of expansion.
Meanwhile, investment made by businesses over the past year also demonstrates a focus on growth – with winning new customers, investing in new machinery, hiring new staff and increasing marketing sitting in the top five areas of investment, a NAB white paper on SMEs reveals.
Looking to the future
According to TAFE NSW business management teacher Anthony Jones, sticking with traditional approaches and believing it will suffice in the future is holding many small businesses back – particularly if they’re exposed to a shrinking market.
“It’s important to work on your business, rather than always working in your business to ensure you’re set up to compete,” says Jones, adding that recognition of competition is an integral factor.
“Even when it comes to advertising your business, you need to look at where your audience is and how to reach them in a more effective way. Businesses with a unique service will struggle if they continue to rely on word of mouth into the future.”
Planning ahead when it comes to funding business growth is paramount given that access to finance remains a significant issue for SMEs. The Sensis research reveals that 30 per cent of business owners and managers believe it’s harder to access finance than it was six months ago.
The report also found that a quarter of businesses are using credit cards to access finance, and more than one in five are increasing their overdraft facilities.
“It’s not enough to be really great at what you do; you always need to be looking to the future and making sure you have an attractive offer that continues to appeal to your constantly-shifting target market,” Jones says.
Continuously looking for ways to keep things current and fresh is key, he adds.+