SME economic confidence hit by rising fuel prices

service station, fuel

The latest data from business management platform MYOB revealsthat SMEs are less confident about Australia’s economic future as they were six months ago, with 53 per cent anticipating improvement in the next 12 months, down from 57 per cent in June 2021.

The research shows that the finance and insurance sector is most likely, at 70 per cent, to anticipate economic improvement over the next 12 months, while construction and trades are more pessimistic at 41 per cent. And 68 per cent of the transport, postal and warehousing services believe the economy will improve, which the research attributes to an increase in online shopping during COVID.

The research also notes that for the first time since COVID-19’s initial outbreak in Australia, the virus is actually not the foremost pressure facing SMEs, but rather the fuel prices, which has caused 41 per cent of respondents “extreme” or “quite a lot” of pressure. The pandemic is second on the list at 34 per cent, followed by the cost of utilities at 31 per cent.

Emma Fawcett, MYOB General Manager, SME, said as Australia’s 2.4 million businesses plan for the year ahead, they are not only thinking about Australia’s economic performance; traditional business worries are on the rise as they prepare for 2022.

“Unsurprisingly, given the past two years we’ve had, business pressure points have been felt keenly by SMEs, particularly those with 20-199 employees (mid-sized SMEs),” Fawcett said. “In fact, more mid-sized SMEs felt ‘extreme’ or ‘quite a lot of pressure’ from the common business pressures overall, compared to the national average.”

While smaller businesses are concerned with fuel prices and utilities, mid-size enterprises are concerned about attracting new customers at 44 per cent compared to a national average of 26 per cent, upgrading IT software and syste at 35 per cent compared to 16 per cent national average, and exchange rates concerning 33 per cent compared to a national average of 18 per cent.

With regards to their financial health, 41 per cent of SMEs said their revenue is the same as it was a year ago, 25 per cent saw their revenue increase, while revenue decreased for 33 per cent of SMEs, with the COVID-19 pandemic being the key driver for those who saw a decline (66 per cent).”

When asked about revenue predictions for the upcoming calendar year, the research found that 43 per cent expect revenue to increase and 37 per cent of respondents anticipate revenue to be the same in 12 months’ time. Increased consumer demand accounts for 29 per cent of those expecting an increase, and for 19 per cent, their expected increase is due to the COVID-19 pandemic.

“Following the challenges of the last 24 months, Australia’s small-business operators will need to remain resilient as they plan for the year ahead,” Fawcett said. “Hopefully, 2022 brings a period of stability that will enable them to back their businesses, their revenue predictions and their growth plans, to ensure the success of a sector that makes up 95 per cent of Australian businesses.”