Economic confidence has dipped to a two and half year low amongst small to medium business operates, according to the latest research by MYOB.
The March 2012 MYOB business monitor report found 19 per cent of 1,043 small to medium business owners and managers (SMEs) surveyed expected the domestic economy to improve with 12 months.
It was the lowest percentage recorded since the March 2009 report found 16 per cent expected the domestic economy to be better than now’ over the next 12 months. In the July 2009 report 45 per cent expected an improvement within 12 months.
MYOB CEO Tim Reed said: “These results paint a stark picture of the financial and emotional challenge facing small to medium business owners, their families and their staff over the next year. They will need significant support from their networks and the government in order to swim strongly through these challenging times.”
“Given the lack of confidence in Australia’s short-term economic future uncovered by our latest MYOB Business Monitor, it’s unsurprising that we also found the majority of SMEs expected to make no change over the next year to their levels of staffing, salaries, investment in R&D, sales promotions, overseas exports and more.
“Having said that, more than one third intended to increase their focus on customer retention strategies during that time and close to one third intended to increase their attention on customer acquisition strategies.”
One positive finding was the 30 per cent anticipating their business revenue to rise in the next 12 months and 39 per cent expecting theirs should hold steady. However, that still left almost one quarter (24 per cent) predicting a fall in revenue.
External pressures from rising fuel prices, interest rates and tax obligations were also worrying business operators.
“External pressures such as rising fuel prices, weakened cashflow and daunting levels of paperwork are keeping business owners up at night as they head into the most compliance-heavy, end of financial year period since the GST was introduced. They will applaud any government initiatives that inject funds into their bank accounts and take away some of the tax time pain,” Reed said.
“The new Minister for Small Business is facing these challenges alongside his constituents. The good news for Mr O’Connor is that much of the homework for effective change has been done by Ken Henry and at last year’s Tax Forum, but SMEs need those reforms implemented quickly if the sector is to bounce back in the next 12 months.
“Two initiatives currently on the table – 1) a new type of business entity that has some of the benefits of a company, yet the simplicity of sole-trader trading, and 2) a tax loss carry-back scheme – would be welcomed loudly by a sector that needs measures such as these to make business life a little easier.”