Small to medium firms look to throw off shackles: Sensis

Latest Sensis Business Index shows strongest T&L confidence in years

Small to medium firms look to throw off shackles: Sensis
John Allan says small and medium businesses see strength in the economy


The Sensis Business Index September Quarter 2017 is showing the brightest transport and logistics (T&L) perceived outlook in years for all but the biggest companies.

While noting that volatility "has characterised this sector for a long time", the marketing services firm sees the T&L surge as part of a general growth in morale sector in the small to medium segment that the index measures.

Indeed, confidence in the sector is above the national rate for the first time in just  more than two years

"Confidence has greatly improved, moving above the national average even though last quarter was difficult," the report says of what Sensis calls the ‘transport and storage’.

"Confidence doubled from +25 to +51, which lifted it above the national average of +46.

"Growing sales, followed by initiatives taken were the two leading reasons for confidence in this sector. Falling sales were the leading issue for those who are worried."

"Last quarter, there were negative balances recorded for sales (-16) and profitability (-11). The net balances for prices (+5) and wages (+1) were positive but well below average.

"The result for employment was highest of all (+8). Expectations this quarter are all positive and near the average for sales (+18), profitability (+17) and prices (+19)."

"The net balance score exceeds the average for employment (+18), but is well below for wages (+6)."

It is fairly well accepted that T&L is a proxy for the rest of the economy, where Sensis sees sentiment as also entering more positive territory.

"Australia’s economic fortunes appear to be on the up, with the past four quarters of the Sensis Business Index (SBI), including this one, revealing a positive outlook towards the economy among Australia’s small and medium businesses (SMBs)," Sensis CEO John Allan says in a commentary.

"In fact, this level of optimism has not been seen since December 2013 with more businesses saying they believe the economy is growing (25 per cent) than slowing (16 per cent) for a positive net balance of +9.

"Small and medium businesses see strength in the economy and this is revealed in their assessment of each of the key indicators,  all of which – prices, sales, profitability, employment and wages – saw a rise in the net balance score both for last quarter and in expectations for the quarter ahead.

"Not only are businesses confident about the economy generally, but they are also confident about their own specific business strengths, with the business confidence score up seven points to sit at the equal highest level since March 2010."

The sectors that show the greatest confidence are Hospitality; Communications, Property and Business Services; Cultural, Recreational and Personal Services; and Health and Community Services.

Allan highlighted out Transport and Storage, noting it had enjoyed a 26 point rise in confidence, and Hospitality for particular mention.

Access to finance also improved, with the good news it has become easier for many SMBs to secure loans. Of the 12 per cent of SMBs who applied for finance, more than two thirds were successful.

With the ability to access finance, a SMB owner can think about capital expenditure to grow their business, which in turn can drive more sales and flow on to requiring more employees, and so on.

While there is much that SMBs feel optimistic about there are still challenges and 12% say that a lack of work or sales is a key concern while 8 per cent are frustrated at the inability to find or keep staff.

A number of state and territory governments are addressing this, rolling out training schemes to help build skills and capabilities useful to SMBs.

Many of the unprompted comments coming from SMBs who believe their government’s policies are supportive cite the training programs that have been implemented as evidence.

The Sensis Business Index September Quarter 2017 is based on 1,003 telephone interviews conducted with small and medium business proprietors or managers respectively, employing up to 199 people.

This sample is drawn from metropolitan and major nonmetropolitan regions throughout Australia with targets set for location and industry. Interviewing was conducted from July 17 to August 15, 2017.

Companies with up to 19 employees made up 90 per cent of respondents.

The ‘Transport and Storage’ sector provided 59 respondents.


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