The latest SME Growth Index report by non-bank business lender ScotPac reveals that in their survey of over 700 SMEs only 46 per cent are on track to hit their business targets for this year.
Hiring challenges and staff shortages are identified as the major roadblock for 40 per cent of these SMEs that are having difficulty reaching their revenue targets in 2022. Larger SMEs were the most affected, with 48 per cent of those with revenues between A$5 million and $20 million impacted by gaps in their workforce related to COVID-19 border restrictions.
Another leading factor for SME underperformance is working capital constraints, with a third of businesses stating that poor access to finance was holding them back from reaching their revenue targets. This was highlighted by lengthy loan approval times reported by Australian SMEs, with the average now stretching beyond a month to 35 days.
Other reasons cited as to why SMEs have been unable to reach their financial targets in 2022 are:
- COVID restrictions/prevention measures, as cited by 28 per cent.
- Depressed demand for services or products, as cited by 25 per cent.
- Supply chain issues, as cited by 18 per cent, predominately larger SMEs.
- Difficulty accessing grants, as cited by 18 per cent, the majority of whom referenced issues with government grants and support programs,
Six per cent of SMEs said that poor execution stopped them from achieving revenue targets, and 11 per cent said they just didn’t have enough time in the day.
ScotPac CEO Jon Sutton said the findings showed that many SMEs are still in recovery mode and looking for solutions after two years of economic disruptions.
“This report reinforces the fact that many SMEs need support, including fast access to working capital, as they continue to recover from the far-reaching impacts of COVID-19,” Sutton said.