SME growth sentiment down amid cashflow concerns

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SME owners are working up to 80 hour weeks, are losing sleep about cashflow and almost one in four are predicting revenue to decline through to the end of 2016, according to results of the Scottish Pacific SME Growth Index released today.

Since September 2014 Australia’s largest specialist working capital finance provider has engaged specialist research firm East & Partners to conduct six monthly polls of 1200 small to medium enterprise leaders across all states and key industries (for key results summary, see following page).

Scottish Pacific CEO Peter Langham said the latest results show that SME confidence has taken a hit despite the resilience of the sector, which according to ABS statistics employs almost half of the 10.7 million Australians in the workforce.

“Over the past two years, SMEs predicting revenue decline have almost doubled (13.2 to 24.2 percent), while those predicting increases have halved their growth forecasts (8.6 to 4 percent),” Langham said.

For the first time since the Index began, SMEs forecasting positive growth (48.4 percent) are outnumbered by SMEs forecasting negative growth or no change (51.6 percent).

“The current environment is clearly placing pressure on Australia’s small to medium business community,” Langham said.

“SMEs nominated cash flow as the most stressful element of business. They cited credit conditions as a key barrier to growth. With the Index highlighting that cash flow keeps 72.5 percent of respondents awake at night, it’s crucial for these leaders to find the right funding to support their business,” Mr Langham said.

“Businesses are increasingly looking beyond the banks to fund growth and to help ease cash flow concerns. From this time last year, there has been a 30 percent increase in SME owners planning to fund their growth using a specialist non-bank lender, with one in five now indicating their intention to do so.”

Langham said SME Growth Index surveying took place in July and August, in the aftermath of the Federal Election and UK Brexit referendum. While uncertainty around these events may have influenced some responses, the results were a timely reminder to governments, industry bodies and financial institutions of the importance of having the right regulatory and funding systems in place to stimulate and support the nation’s vital SME sector.