Open borders key to the recovery of small businesses

The latest edition of the twice-yearly ScotPac SME Growth Index research reveals that open borders are seen by 64 per cent of SMEs as the primary factor that will help in their recovery.

The research, conducted on the non-bank SME funder’s behalf by East & Partners, polled 1252 owners or senior leaders of small businesses across major industry sectors around Australia between September and October.

ScotPac CEO Jon Sutton said the findings regarding a call for open borders were consistent across small-business respondents regardless of state, size, or industry.

“Given the COVID-19 spikes first in Victoria, then South Australia and now NSW, and the varied way the states are dealing with border closures, it’s clear that the small-business sector sees a unified approach as the way out of trading difficulties caused by the pandemic,” Sutton said.

“On top of this, a further 25 per cent of small businesses went beyond the survey response options and wrote in that their biggest recovery factor would be reducing state power and giving the Federal Government greater control.

“Of their own accord, small businesses wanted a more federal approach to the pandemic,” Sutton added. “This is primarily a call for open borders and reducing the power of the states to make decisions that impact the national economy.”

The survey also asked respondents about what they are most positive about for 2021. The most popular response, at 24 per cent, was getting “back in the black”, 21 per cent said it is the reduction of debt, while 17 per cent said it’s their plans to relocate or enter new domestic markets.

Younger businesses (under 12.5 years) were also noted to be more positive than their older SME counterparts when it comes to entering new domestic or international markets and releasing new products or services.

“This may be due to a view by the owners of these younger businesses that if they can ride out 2020 they can survive anything,” Sutton explained. “Whereas the owners of older businesses may be more conservative and keeping their focus on dropping debt.”

SMEs feel they need to overcome in 2021 the problems of excessive debt levels (22 per cent), diversifying their funding base and/or finding new funding sources (16 per cent), securing or increasing their customer base (16 per cent) and avoiding insolvency (11 per cent).

“The research clearly showed that established SMEs were much more likely to have strategic planning in place than younger businesses,” Sutton said.

“This, along with the result showing SMEs either have made or are considering a change in direction about their pre-pandemic funding arrangements, highlights the importance of small businesses seeking qualified, expert advice.

“It’s clear that small-business owners, and their advisors such as their accountants and brokers, need to be making hard decisions about business structure, strategy and finding new and improved ways to fund the business for 2021 and beyond,” Sutton concluded.