New research reveals that, contrary to popular perception, the impact of the pandemic on business for Australian SMEs has been less widespread and less severe than feared.
The latest Canary in the Coal Mine report released by Prushka Fast Debt Recovery, based on a survey of nearly 500 Australian small-business operators, reveals that 47 per cent of small businesses did not change any part of their business model to navigate the pandemic.
In addition, many businesses have a positive outlook for the rest of 2021 and early 2022 now that lockdowns and restrictions have eased, even though the pandemic is far from over. In fact, 86.8 per cent anticipate they will not have to close for the remainder of the year because of the negative economic impacts of COVID.
Roger Mendelson, Founder of Prushka, expressed pleasure and surprise with the survey results and what this says about the outlook for SMEs in Australia.
“We’re seeing a much more positive attitude in the SME sector than one would expect based on what’s happened over the past two years,” Mendelson said. “Much of the focus of the business impact from COVID has been on main street businesses such as gyms, cafes and shops. Although these businesses are highly visible, they represent a very small percentage of activity in the SME sector.”
Most SMEs retained all employees over the last 18 months with 73.3 per cent having not let go any staff. However, 45 per cent of SMEs lost more than $60,000 in revenue over the course of the pandemic so far, while 28 per cent lost less than $10,000 and nearly 27 per cent lost $10,000 to $59,999.
“Until now, businesses have had to make tough decisions to survive and as COVID-related restrictions seem to be a thing of the past, there will be new challenges to overcome,” Mendelson said. “Now more than ever businesses should be focused on best and worst-case scenario planning, to ensure they have a framework in place that allows their business to operate no matter the circumstances.”
When asked what their biggest concerns were over the coming 12 months, SMEs noted profitability, growing their customer base and supply shortages or availability of labour as major concerns. To mitigate any potential issues with cashflow, nearly 57 per cent of SMEs said they have a cash buffer in place, but businesses are continuing to rely on personal funds as a temporary measure.
“It is concerning that SMEs are still continuing to rely on their own funds in times of strife, as this can place pressure on families,” Mendelson said. “Forecasting a business’s cashflow ahead of time can help you plan any expenses around your projected cash inflows and ensure you are adhering to your credit collection processes.”
Positively, SMEs feel they are in a good position to currently manage their debts, with nearly 48 per cent saying their debt is manageable, and almost 35 per cent saying they have limited or no debt.
Even though SMEs are spending less time chasing payments, 42 per cent of businesses are finding it harder to collect debt, with the building and construction sector and individual customers being the worst payers of invoices.
“While it’s a good sign that SMEs are spending less time chasing debts, it’s still concerning they are finding it hard to collect,” Mendelson said. “For SMEs to survive in this new normal, they must be adaptable, flexible, and able to act on decisions quickly. Strong cashflow processes are more important than ever for survival.”