One third expect revenue gain in 2014, up from one quarter in 2013
One quarter expect domestic economy to improve within 12 months
Finance & insurance industry on the up while construction & trades feel the heat
As we approach the second quarter of 2014 the SME sector is already showing significant improvements in economic sentiment and business conditions, according to Australia’s leading accounting software provider.
The March 2014 MYOB Business Monitor Report reveals a rising proportion of these businesses reporting annual revenue growth when compared with recent years - reaching a level unseen since March 2011. It also shows a declining proportion reporting a fall in revenue.
Although less than one quarter (22%) reported rising revenue when asked to look back over the year to February 2014, this was an improvement on the previous five consecutive surveys. One third (34%) reported a revenue decline, however this too was the best result reported since March 2011.
Further, a significant increase was seen in the proportion of SMEs anticipating a revenue rise in the next 12 months (34%, up from 25% in the prior report). 22% expected revenue to fall (on par with the prior report).
The positive progress in revenue expectations aligns with
expectations of the domestic economy. Over one quarter (26%) of
respondents expected economic improvement within 12 months, up on 23%
in the prior report.
MYOB CEO Tim Reed says, “In line with our predictions in our trans-Tasman report earlier this year, I’m pleased to see the strong improvement in performance and expectations among Australia’s small and medium business operators, who are major contributors to Australia’s economy.
“Their financial confidence strongly influences the health of our GDP and MYOB’s new research findings tell a clearly positive story. Buoyed by record-low interest rates and a lower Australian dollar, local SMEs’ hard work and resilience is now bearing fruit. I’m delighted to see more than one in five reporting increased revenue and an even higher proportion – one in three – expecting a better year ahead.”
In terms of performance by industry, those in finance and insurance were again the most likely to see a revenue rise (33%, up three points), followed by agriculture, forestry and fishing (26%). Operators in construction and trades were hit hardest, with 44% experiencing a revenue fall, closely followed by operators in manufacturing and wholesale (43%).
The industry most likely to expect revenue gain was finance and insurance, at 64% - well ahead of the other industries. This was followed by the ‘other industry’ category*, at 36%.
Of the mainland states, South Australia and Victoria were most likely to see revenue rise (29% and 28%) followed by Queensland (24%). New South Wales was the most likely to see revenue fall (36%).
The state most likely to expect revenue gain was Victoria, at 40%, followed by South Australia, at 34%.
One third (33%) of the SMEs surveyed reported more work/sales in their pipeline for the next three months than anticipated. 45% reported an expected pipeline, and 21% saw less work than expected. This was an improvement on the September 2013 report, at 28%, 43% and 27% respectively.
Increasing pressure to attract new customers & combat competitive activity
Fuel prices was once again the top pressure point for SMEs, as it has been since March 2011. Cash flow remains at second place, while attracting new customers rose one place to equal third with competitive activity. Price margins and/or profitability dropped three spots to fifth. The biggest mover of all the 16 pressures listed was interest rates – rising to sixth place from eight in this survey.
Of all the industries, operators in agriculture, forestry and fishing felt the most pressure from fuel prices, while those in construction and trades felt the most pressure from cash flow. Operators in manufacturing and wholesale felt the most pressure from attracting new customers and competitive activity.
Of the mainland states, Western Australians felt the most pressure from fuel prices, attracting new customers and competitive activity, while South Australians and Queenslanders felt the most pressure from cash flow.
Customer-focused strategies a top priority for the fourth consecutive survey
In terms of intended investment of time and/or money across various business elements, the areas most likely to see an increase in focus over the next 12 months were:
- Customer retention strategies – 30%
- Customer acquisition strategies – 26%
- The number or variety of products or services offered by the business – 26%
- Prices and margins on the products or services sold – 26%
- Sale of products/services online / offline – 22%
The top three priorities have been relatively consistent since the question was first asked in October 2011. Further down the list, the intent to increase investment in the amount paid to employees dropped two spots to seventh, as sales of products/services online rose to equal fifth with offline sales of products/services.
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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.