28 March 2017
How confident are Australian SMEs about the year ahead? This will be a key question on many business owners' lips as the federal budget looms and we head deeper into 2017.
There is no shortage of new research on key 2017 SME trends in Australia, so let's take a look at what factors are currently affecting business performance.
Business confidence is high …
The Sensis Business Index for the December quarter of 2016 revealed SMEs were more confident over the three-month period than they've been in six-and-a-half years.
Scottish Pacific's SME Growth Index for March 2017 showed more than 90 per cent of businesses are unhappy with cashflow.
National Australia Bank's Quarterly SME Survey for the same period showed similar results, with business confidence at 5, which is considerably higher than its long-run average of 2.
The latest Westpac-Melbourne Institute SME Index, published on March 14, also showed a slight decline but only slipped from 100.7 to 99.9.
"Trading conditions have clearly improved on a year ago," said Westpac Senior Economist Matthew Hassan.
… But consumer confidence is low
While SME optimism is impressive, the same can't be said for consumers.
Mr Hassan noted that demand is "patchy", and a recent Dun & Bradstreet business expectations survey found that 42 per cent of organisations are concerned about Australian consumer confidence in 2017.
Similarly, the most common problem that SMEs mentioned in the Sensis research was decreasing sales, which can quickly become a severe business liability.
But the latest Westpac Melbourne Institute Index of Consumer Sentiment could suggest there is light at the end of the tunnel, with the index rising 0.1 per cent in March to stabilise at 99.7.
Cash flow remains a problem
Dun & Bradstreet revealed that capital investment expectations across all Australian organisations were higher for the second quarter of this year than at any other time in the two years prior - but are SMEs driving this trend?
Scottish Pacific's SME Growth Index for March 2017 showed more than 90 per cent of businesses are unhappy with cashflow. Furthermore, 65 and 61 per cent of SMEs cited credit conditions and credit availability, respectively, as key barriers to growth.
A lack of access to finance could hamper SME's investment intentions this year, making it difficult to capitalise on market opportunities and limiting expansion plans.
Ultimately, Australian SMEs seem to be facing both positive and negative business trends in 2017. While no one can predict the future, organisations can prepare for unforeseen circumstances by ensuring they have comprehensive business insurance.