SMEs cautiously optimistic about revenue growth

revenue growth
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A new report indicates that Australia’s small businesses are cautiously optimistic that they will achieve positive revenue growth for the next six months.

ScotPac’s latest SME Growth Index reveals that while recovery is still uneven and varies significantly by state and sector, almost half of the 1253 business owners surveyed (48 per cent) expect positive revenue growth for the next six months, with an an average growth-rate forecast of 4.1 per cent.

On the other hand, the proportion of SMEs expecting revenue to decline hit a new high, with one in four small businesses forecasting a revenue drop, with the average decline expected being -5.5 per cent.

At a state level, Victorian SMEs are the most affected still by the economic crisis, due in the main to recent lockdowns. Only 10.5 per cent of Victorian SMEs are forecasting growth, while 63 per cent of them believe their revenues will decline.

Market-wide, SME revenue forecasts ranged from -10 per cent to +9.1 per cent, for a modest overall average revenue increase of 0.9 per cent for the small-business sector in the next six months compared to the previous SME Growth Index.

ScotPac CEO Jon Sutton said that revenue uncertainty is more marked at the smaller end of the SME sector, with $1-5 million revenue SMEs feeling the brunt more than their $5m-$20m revenue counterparts.

“Overall the small-business sector has rebounded well considering the depth of the challenge the pandemic created,” Sutton said. “But many SMEs are not out of the woods yet. There’s much uncertainty about the long-term pandemic recovery path for those SMEs weaning off government stimulus or coping with sector-specific challenges, in particular tourism, accommodation, retail and restaurants.

“One positive in this round of the SME Growth Index is that the average revenue growth forecast has increased eight points from H2 2020, reflecting a strong ‘bounce back’ in confidence for many small-business owners,” Sutton added. “For the businesses facing uncertainty, and needing reliable cashflow, it’s crucial to focus on getting expert advice and putting in place sufficient funding to support recovery and growth.”