SMEs looking forward to growth once lockdowns end

retail industry, reopen, growth

SME owners are looking forward to growing their businesses as they anticipate the end of the lockdowns that have long constrained them, according to the latest National SME Growth Index released by non-bank lender ScotPac. The research found that just over half (50.1 per cent) of SMEs are forecasting revenue growth in the second half of 2021. The average revenue increase of expectation 4.8 per cent represents a healthy uptick from a year ago (4.4 per cent).

ScotPac CEO Jon Sutton said polling also revealed a promising increase in the proportion of SMEs planning to invest in their business through to the end of 2021. Out of 1255 businesses, 57.9 per cent were looking to invest back into the business. This is a significant jump from late 2020 when a four-year low of 51.9 per cent was recorded.

“This brings investment intention almost back to pre-pandemic levels,” Sutton said. “It’s important to note the research took place over six weeks before and in the early days of the NSW Delta outbreak. Findings indicate that if we can get past lockdowns and border restrictions, a slim majority of the SME sector is backing its ability to achieve revenue growth.”

On the other hand, ScotPac noted that negative growth SMEs are finding it tougher than ever. “The impact of Victoria’s 2020 extended lockdown is still being felt by the small-business sector, something NSW should be mindful of as they look towards reopening. Small-business winners and losers are increasingly separated by location and industry,” Sutton warned.

Sutton also noted that the SME Growth Index recorded the highest ever proportion of SMEs forecasting revenue will decline (26.1 per cent), with the widest ever revenue range (from +9.6 per cent growth to -15 per cent decline).

“We also recorded the equal lowest ever proportion of SMEs reporting no change in revenue (23.7 per cent), suggesting businesses are being forced off the fence and either scaling up for growth or bracing for troubled trading conditions,” Sutton said.

“Our past three research rounds have seen consecutive results with the highest number of contracting SMEs at any time since 2014. Given the optimistic growth prospects of half the sector, combined with the warning signs for the troubled end of the SME sector, the next 12 months are likely to see strong restructuring and M&A activity.”

“This is yet another reason for small-business owners to ensure they are getting professional advice to guide their enterprises and the right funding to fuel their business activities and allow them to survive and thrive,” Sutton concluded.

The SME Growth Index is Australia’s longest-running in-depth research on small-business growth prospects. Conducted by East & Partners, the September 2021 round polled a representative sample of 1255 small-business leaders across the nation.