*SME pain points drop over seven year period
* Customer acquisition and late payments causing stress
* Attitudes towards technology are more positive
In a review of the key business pain points over the past seven years, Australian small business operators have shown resilience in a changing economic environment, the latest MYOB Business Monitor has revealed.
The bi-annual national survey of over 1,000 small business owners has found pain points such as upgrading IT software, interest rates, tax obligations and fuel prices are at all-time lows, when reviewed in the context of the past seven years of data.
SME owners were found to have had the most difficult time between the period of October 2010, and August 2013, while the end of 2016 depicted a more positive outlook. Tim Reed, CEO of MYOB believes that the results are indicative of a resilient and flexible sector.
“We aren’t talking about small, incremental changes here; the Business Monitor results show us that SMEs go through a plethora of issues year on year.
“In August 2013, nearly half of SMEs (46 per cent) told us that fuel prices were causing either quite a lot to or an extreme amount of business pressure, yet today – less than a quarter (23 per cent) feel this way.
“With such great ebbs and flows to the economic world around us, it’s our small and medium business owners that have always beared the brunt of this change. It shows that the sector is extremely resilient to this, which is really uplifting to see, from the group that is accountable for employing roughly 45 percent of the private sector,” said Mr Reed.
Customer acquisition and cashflow a continued bug-bear
While business owners have demonstrated their resilience through the changing economic and political climate of the past seven years, a few issues continue to present pain points moving into 2017.
When asked what elements of the business environment operators expected to cause an extreme amount or quite a lot of pressure on their business in the next 12 months, attracting new customers emerged as the top business pressure, followed by cashflow and late payments from customers.
Painpoints around attracting new customers jumped from 24 percent to 27 per cent this quarter, highlighting the pressure on owners to be growing their business. This issue was more prevalent for Western Australian operators (45 per cent), small businesses (44 per cent) and operators who reported a revenue fall in the previous 12 months (43 per cent).
Over a quarter of SMEs (26 per cent) identified their struggle with cashflow, and a staggering jump from 19 per cent to 26 per cent of SMEs said that late payments from customers were putting them under undue pressure, up seven points from the last quarter. The report found that these issues are having the biggest impact on franchisors and construction and trades businesses.
“The RBA tells us that on average, an invoice will take 45 days to be paid. For a small business owner who is managing professional and personal bills while also trying to invest in their business, this is too long – and part of the reason why we are pushing for a Prompt Payment.
The cashflow crunch can also hinder business owners who want invest in growth activities, such as buying stock or upgrading equipment. This is one of the reasons behind the growing uptake of MYOB’s short-term, unsecured loans.
“MYOB Loans, Powered by OnDeck can be approved in as little as one day, allowing small businesses to respond quickly to business opportunities and fund their growth,” explained Mr Reed. MYOB has a 30 per cent stake in OnDeck’s Australian operations.
Technology becomes simpler
The report also revealed a downward trend for those SMEs seeing technology as a painpoint. The cost of on online technologies was viewed as a painpoint by nearly one fifth of SMEs (19 per cent) in February 2015, that statistic now dropping to 16 per cent in the present day.
Upgrading hardware or other equipment has also taken a drop from 16 per cent to 15 per cent between February 2015 and today, along with upgrading IT software, systems or processes (14 per cent to 13 per cent).
“It’s great to see that small business owners are seeing technology as a benefit rather than a pain-point, even if it’s a slow transition.
“Traditionally, small businesses have been slower with technology uptake, so we’re pleased to see that more accessible, simple and cost-effective technology is changing the attitude around technology adoption,” said Mr Reed.
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About the MYOB Business Monitor
After six years of conducting the MYOB Small Business Survey we've enhanced it to better reflect the profile of Australian businesses. We've now incorporated medium businesses, along with the sole traders and small businesses that were already part of the survey. We're pleased to present the new look MYOB Business Monitor.
The MYOB Business Monitor is a national survey of over 1000 Australia's business owners (and directors) conducted twice a year by Colmar Brunton.