Over half of manufacturing and wholesale operators experienced a revenue fall last year, while SME’s are more positive on their revenue forecasts and overall business outlook according to the latest release of the MYOB Business Monitor.
The MYOB Business Monitor which began in 2004 is national survey of small and medium business owners and managers, commissioned to independent market research firm Colmar Brunton. The latest edition is the first of the year.
The report reveals that the economic confidence and overall business outlook of small to medium business operators (SME’s) are finally on the rise.
The latest study of 1,005 of Australian business owners and managers, which took place over January and February, showed that over one quarter of SMEs expect the domestic economy to improve within 12 months (26%). Those who expect that improvement will take more than a year is down from 42% to 37%, while those who expect it to take more than two years is down to 22% from 24%.
SME’s were also positive in their expectations for their revenue, with 30% anticipating a revenue rise, and 42% expecting revenue to remain stable.
“We highlighted our expectation of a rise in economic confidence amongst SMEs around the time of the December cash rate cut, when we conducted a retrospective analysis of the last five Business Monitors. I’m pleased to see small and medium businesses are feeling more assured of an upturn,” says MYOB CEO Tim Reed.
“I’m even happier to see 72% of SMEs expect increased or stable revenue this year. Considering only 58% saw that occur last year, it indicates hope is springing back for Australia’s business coalface.”
For the 19% who expect their revenue to fall, Reed advised the businesses to seek assistance from a business coach or an accountant. They should avail of expert knowledge accumulated through years of experience working with other businesses.
“There’s a lot to be gained from the lessons learned by other businesses and their tactics to combat pressures,” says Reed.
40% of the respondents reported steady revenue when they were asked to look back over the past year, but this is only one percent more than those who saw their revenue decrease.
The manufacturing and wholesale industry were hit the hardest, with 52% experiencing a revenue fall.
“Similar to retailers and tourism operators, manufacturing and wholesale operators continue to battle the impact of the strong dollar. Our research found over half the respondents in this sector experienced a revenue fall last year and their biggest pressure point is price margins and/or profitability, followed by fuel prices,” says Reed.
“The strong dollar benefits those who import or travel abroad for business, but is detrimental to those who produce locally and export. Australia’s manufacturers are finding it a challenge to be a competitive supplier to local and international buyers.”
According to the media release fuel prices continue to be a pressure point for SME’s.
Mr Reed says, “While the rising cost of fuel continues to bite the hardest, cash flow is becoming less of a concern. Last year it was the second biggest pressure on SMEs, yet it dropped to fourth in this survey.”
“Interest rates are also less of a concern. After five cuts since late 2011, the cash rate remains at its lowest since 2009. SMEs instead feel more heat from the need to bring in more customers. Many operators are hopeful of the exchange rate moving into more favourable territory to help boost consumer spending.”