The financial crisis is expected to hit small businesses hard, with half seeing themselves better placed in 12 months time
The financial crisis is expected to hit small businesses hard with only half seeing themselves better placed in 12 months time, a survey has found.
According to the latest MYOB Australian Small Business Survey – which was taken just prior to the global meltdown – 70 percent of business owners believe their business is currently performing quite or very well.
However there has been a 15 percent drop in future performance outlook since this time last year to only 50 percent – the lowest result in the past four quarters.
“While the fieldwork for this survey took place just before the current instability, it shows that small business owners were already becoming more pessimistic about their future” MYOB CEO Tim Reed says.
The survey shows small business owners also remain disappointed with the Federal Government’s contribution towards the development of small business, with 56 percent of small business owners rating its performance in this area poor or very poor.
This increased from 37 percent in November 2007 (with the change of Government) but has remained steady since June 2008.
“Small business owners are facing tough times. With so many macroeconomic issues in flux at the moment; inflation, consumer confidence, exchange rates, changes to industrial relations laws and uncertainty in business costs, whether fair or unfair it is understandable that small business owners are feeling dissatisfied with their Federal Government,” Reed says.
Petrol is still a key concern for small business, with 73 percent reporting a consequent increase in costs, while 36 percent say they either have or intend to raise costs as a result.
Despite this the degree to which businesses are being funded through borrowings fell from 45 percent in September 2006 to 30 percent at present.
As a result Reed says many businesses are in better shape to deal with any short-term declines in sales however 5 percent of small businesses surveyed are likely to default on loans in the next 12 months.
“Businesses who are anxious about their ability to repay these loans, should seek professional advice from an accounting professional,” he says.
“Many business owners only use their accountant for tax advice and tidying up their business history. They could really benefit from engaging their accountant to help them plan their business future, and ensuring their business is fit for whatever economic conditions lay ahead.”