As business optimism continues to soar high, Aussie SMEs cite their top three business goals in 2017 are revenue growth, retaining customers and increasing business efficiency.
The Westpac-Melbourne Institute SME Index, which aims to provide information about the economic health of Australian SMEs, has revealed a 15.2% increase in business optimism and confidence, going from 83.0 in Q2 2016 to 95.6 in Q3 2016.
Westpac’s General Manager of SME Business Bank, Ms Julie Rynski said, “It’s pleasing to see a strong uplift in business optimism. These results are a solid recovery from a weaker level last quarter with a promising view for the lead in to Christmas.”
“Our customers are telling us their top three business goals in 2017 are revenue growth, retaining customers and increasing business efficiency. Now is a pivotal time when SMEs should be critically reviewing the past 12 months and making meaningful changes for the year ahead,” Rynski said.
The survey also saw an 18.7% rise in the Future Conditions Index, as SMEs expressed optimism towards future business conditions, reflected by positive changes in employment (a net balance of 6.1% of SMEs have hired more staff in the last 12 months) and in investment (a net balance of 14.4% of SMEs have increased investment in the last 12 months).
SME’s perceptions of current and future conditions differ significantly by sector, with SMEs in Hospitality and Recreational Services the most optimistic (138.7). SMEs in Manufacturing remain pessimistic about current conditions (Current Conditions Index reading of 77.1) but are hopeful about the next quarter (Future Conditions Index is 108.6).
Rynski added, “SMEs contribute a little over half of private sector economic activity and are the fastest growing segment in Australian business. They are the heart of our economy and most importantly, have the scale to help fill the gap created by the reducing business activity of traditional sectors.”
SMEs remained concerned about Current Conditions (at 78.2) due to weak activity and declining profits. A net balance of 5.2% of SMEs saw a decline in real business activity over the last 12 months and a net balance of 17.2% reported a decline in profits over the same period.
Westpac Senior Economist, Mr Matthew Hassan said there were a number of contributors to the current results.
“Some of the positive forward view may reflect the lead-in to the Christmas period, a particularly important high season for many retailers and SMEs in the hospitality sector. Expectations have no doubt been buoyed by recent interest rate cuts as well. The survey detail still suggests current conditions are uneven, while growth is continuing; incomes remain a weak spot for the Australian economy that is clearly pressuring SMEs’ profitability,” Hassan said.
When asked about the role of mentors, surprisingly the survey revealed that over 80% of Australian SMEs do not have a business mentor and of those that did, the Health and Aged Care Services industry ranked the highest at 40.6%.
Rynski said, “When speaking with customers we’ve found the top qualities sought after in a mentor are financial advice and expertise followed by strong business acumen. SMEs know what they are after in a mentor; the challenge is often finding them.
“Knowing this, we’ve set out to help Australian businesses looking to take their business to the next level through our Businesses of Tomorrow program, giving a selection of high performing businesses access to some of Australia’s best business minds including Ms Gaily Kelly, Ms Ita Buttrose, Ms Pip Marlow and Mr Steven Persson. Hopefully, through this program we will be able to support more SMEs and continue the current positive sentiment into 2017.”
To nominate a candidate for Westpac’s Business of Tomorrow program, please visit www.businessesoftomorrow.com.au
Inside Small Business
