Business secrets revealed

Fresh research for 2013 has revealed a rare insight into the business outlook and top priorities of small to medium enterprises (SMEs) across the country.

The March 2013 MYOB Business Monitor, by accounting software provider MYOB, is the latest round of a national study that has run since 2004 to survey business sentiment in Australia.

The latest results have recorded that the economic confidence of SMEs is finally on the rise, with over one quarter revealing they expect the domestic economy to improve within 12 months (26 per cent).

The new figure represents an increase of seven percentage points from the July 2012 report (19 per cent).

In addition, the Monitor, which is independently commissioned to Colmar Brunton, researches business performance, attitudes and plans over time.

In the latest study of 1,005 Australian business owners and managers, the proportion expecting an economic improvement to take one to two years is now 37 per cent, down from 42 per cent. Those who think it will take more than two years is now 22 per cent, down from 24 per cent.

This positivity was also echoed in the expectations of revenue results for this year. Overall, 30 per cent anticipate a revenue rise, 42 per cent expect revenue to be stable, and 10 per cent said they “weren’t sure”. Only 19 per cent expect a fall.

Two fifths of respondents reported steady revenue when asked to look back over the past year (40 per cent), a little more than those who saw revenue decline (39 per cent).

Last year respondents indicated that they were more likely to see a fall than stability. The proportion who experienced a revenue rise was on par with July 2012 (18 per cent).

Operators in the manufacturing and wholesale industry, however, were hit hardest. Fifty two per cent reported that they had experienced a revenue fall.

Of the mainland states, Queensland and Western Australia were most likely to see a rise (22 per cent), and Western Australia was also the least likely to report a loss (32 per cent). Both New South Wales and Victoria had the highest proportion of revenue fall (40 per cent), with South Australia most likely to have steady revenue (45 per cent).

However, nearly one third of the SMEs surveyed reported more work/sales in their pipeline for the next three months than anticipated (30 per cent).

Fuel prices continue to be the top pressure point for SMEs, as it has been since March 2011, according to the past surveys.

Attracting new customers has risen to second from tied fourth, swapping places with cash flow, which is now tied fourth with competitive activity. Price margins and/or profitability remains in third place.

Interestingly, concern about interest rates is no longer in the top five – having dropped one spot to sixth.

Top priorities for SMEs in terms of intended investment of time and/or money also seems to be focused significantly on business building initiatives now, rather than damage control in the face of sliding sales.

1. Customer retention strategies – 38 per cent
2. Customer acquisition strategies – 35 per cent
3. The number or variety of products or services offered by the business – 26 per cent
4. Prices and margins on the products/services sold – 23 per cent
5. Sales of products/services online – 22 per cent

Commenting on the results, MYOB CEO Tim Reed said the latest figures show a positive improvement and a brighter business future on the horizon.

“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,” he said.

“Successful Australian business owners are known for digging deep, embracing change and adapting. They find opportunities in the challenges.

“There’s [also] a strong correlation between the continued investment in customer-focused growth strategies and top pressures like attracting new customers, cash flow and price margins and/or profitability.”

Reed added, however, that not all businesses are on the road to recovery – with manufacturing and wholesale operators feeling the squeeze.

“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,” he said.

“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.”