Fuel prices a top pressure, while technology & customer strategies are top priorities
Due to stronger business performance, Australia’s start-ups are more confident of their revenue growth compared to 2013, according to the country's leading accounting software provider.
The latest MYOB Business Monitor, revealed 62% of start-ups experienced rising or steady revenue in the 12 months to February 2014. 21% of start-ups reported an increase in revenue, 28% reported a revenue decline and 41% reported steady revenue. In August 2013, these figures were 24%, 34% and 29% respectively.
MYOB General Manager, Business Division, James Scollay says the enthusiasm and confidence of start-ups is something we can all look to emulate regardless of the age, size or type of business.
"It's very encouraging to see the confidence of local start-ups has increased from our last survey. We hope this will result in extra growth investment, which will flow through to the wider economy. Australia is a nation of entrepreneurs with, according to the Australian Bureau of Statistics, over half a million people involved in early stage entrepreneurial activity at any point in time. It’s vital that government and the wider business community continue to support this important sector to help ensure that confidence continues to rise."
The positivity of start-ups is underscored by a strong start to the year with 37% reporting more work or sales in the pipeline for the three months from February to April 2014. This compared to the previous survey where 31% said they had more work or sales in the pipeline for the months of August to October 2013.
Fuel prices top business pressures
The top five business pressures for start-ups were similar to what SMEs identified overall in the MYOB Business Monitor. Fuel prices were the top pain point. Unsurprisingly, attracting new customers was of more pressure to start-ups and ranked second, whereas cash flow was the second ranked pain point for SMEs. Start-ups were also more likely to increase investment in the top five business strategies over the next 12 months than SMEs overall.
"There is a strong correlation between the pain points affecting start-ups and the investment strategies they intend to focus on. For example, increasing focus on customer acquisition and retention strategies can help alleviate the pressure of attracting new customers. This year, start-ups intend to increase their investment in online and also offline sales and marketing strategies. We strongly encourage those who haven’t implemented an online strategy to do so, including usingcloud accounting, which can provide valuable business insights in real-time." says Mr Scollay.
Top five business pressures for start-ups in 2014:
1. Fuel prices – 34% (35% all SMEs)
2. Attracting new customers – 32% (26% all SMEs)
3. Cash flow – 31% (27% all SMEs)
4. Competitive activity – 28% (26% all SMEs)
5. Price margins and profitability – 26% (25% all SMEs)
Top five areas of increased investment for start-ups in 2014:
1. Customer retention strategies – 42% (30% all SMEs)
2. Number or variety of products/services offered – 35% (26% all SMEs)
3. Sale of products/services online – 29% (22% all SMEs)
4. The value of spending on marketing and advertising offline – 29% (18% all SMEs)
5. Customer acquisition strategies – 28% (26% all SMEs)
Polly Green, co-founder of NSW Central Coast start-up Green Ant Toys – an online toy store says, "In our second year of trading the hard work of laying the foundations and setting the structures for our business is now starting to really pay off.
"It hasn't been an easy ride but having robust systems in place to help manage crucial things like cash flow, inventory and accounting has allowed for us to shift our focus to growth strategies. Being an online store we have a lot of competition. We now have time and money to invest in customer acquisition and retention strategies, all contributing to our overall growth of 75% year on year."
Start-ups embrace online technologies
Start-ups continue to lead the way in online technology usage. According to the February 2014 Monitor, almost two-thirds (65%) said their business had an online presence - 22% had a business website, 26% had a social media site for their business, and 17% utilised both. Conversely, 30% of start-ups said they didn’t have an online presence.
In August 2013, 28% of start-ups reported having a business website but only 8% said they had a social media site for business and 15% used both. 42% said they didn't have an online presence.
Mr Scollay says "As online tools and cloud computing become increasingly part of doing business, it's important that all businesses continue to embrace these technologies.
"Our years of research have shown us that not only do online businesses reach more people and are more engaged with their customers, they are also making a significant contribution to economic growth and improving job opportunities for Australians. For example, our latest research found that businesses with a website are more than twice as likely to intend to increase their full-time staff this year than those without a website.
"By investing in online technologies from the get-go, start-ups are in the optimum position to capitalise on all the benefits that online technologies can bring to their business as they aim for growth."
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About the MYOB Business Monitor
Established in 2004, the MYOB Business Monitor is a national survey of small and medium business owners and managers, commissioned to independent market research firm Colmar Brunton. The most recent study ran in July and August 2013, surveying 1,022 operators from sole traders to mid-sized companies, representing the major industry sectors. The Monitor researches business performance and attitudes around areas such as profitability, cash flow, pipeline work, technology usage and government. Note: the weighting of MYOB client and non-client respondents is reflective of overall market proportions. This media release details the survey findings for the 300 importers and exporters in the respondent pool.
About MYOB Australia
Established in 1991, MYOB is Australia's largest business management solutions provider. It makes life easier for approx. 1.2 million businesses across Australia and New Zealand, by simplifying accounting, payroll, tax, practice management, CRM, websites, job costing, inventory and more. MYOB provides ongoing support via many client service channels including a network of over 40,000 accountants, bookkeepers and other consultants. It is committed to ongoing innovation, particularly in cloud computing solutions, and now spends more than AU$30 million annually on research and development. In 2013, MYOB expanded its offerings with the acquisition of accounting solutions provider BankLink. For more information, visit myob.com.au.