More than half (52%) of Australian small and medium enterprises (SMEs) believe the country will be in recession within the next 12 months, and 57% believe the economy will decline in the coming year, according to the latest MYOB Business Monitor.
The survey of 1,000 SME owners and operators, released bi-annually by business management platform MYOB, found businesses are taking action to deal with the rising cost of doing business. The most common ways they’re doing so are by making less (or no) profit (31%), passing on cost increases to customers (30%), and dipping into savings (24%).
Preparing for uncertainties ahead won’t necessarily make it easier for the nation’s 2.4 million SMEs, who have already faced a challenging few years, according to Emma Fawcett, General Manager of SME at MYOB.
“For the first time since the onset of COVID-19, the pandemic didn’t make the top five pressures facing SMEs. Instead, the main concerns are fuel prices, cost of utilities, interest rates, price margins and profitability, and cashflow. These are all indicative of the current economic environment and provide an insight into what businesses will be thinking about in the year ahead.
“Tellingly, these pressures centre on immediate business operations concerns, rather than looking at investment for future scaling or growth. It suggests that businesses are focused on the most pressing and current challenges, rather than making bold, confident decisions about the future.”
Even without the heightened unease around COVID-19, SMEs have had other external factors to contend with throughout the last 12 months. As well as an increase in cost-of-living, 24% of respondents have been impacted by natural disasters. That percentage rises to 30% for SMEs based in New South Wales.
“Australian SMEs are resilient and have made the best of another extremely challenging year. Lessons taken from the pandemic will hold small business owners in good stead, though it’s likely left many feeling uneasy. In fact, 65% of respondents said the pandemic made them more conservative or cautious in their planning.
“While that might not be great news for the economy overall, making prudent decisions may help them to navigate difficulties ahead. The challenge will be how to balance that caution with enough confidence to keep their business thriving.”
SME concerns about the coming year can be seen in many of the latest Business Monitor findings. Twenty-four per cent of respondents expect their revenue will be down this time next year, compared to 13% this time last year. Thirty-nine per cent plan to increase prices and margins on products and goods sold; the most common investment increase for this year.
“At the start of 2022 we saw released a report on SME resilience, which found small businesses were holding onto higher cash reserves to protect themselves following significant upheaval. These latest Business Monitor findings indicate we may see similar behaviour in 2023 and beyond.
“Some industries, such as finance and insurance, have fared better than others. Those working in industries such as hospitality and retail, which rely on consumers having more disposable income, will be hit harder with a cost-of-living crunch.
“Business owners will need to draw on all the lessons learned over the past few years and ensure they’re making smart decisions and maximising their productivity as they prepare for the coming year.
“I’d encourage consumers to support SMEs where they can as they get out and about this summer.”
MYOB is a leading business platform with a core purpose of helping more businesses in Australia and New Zealand start, survive and succeed. MYOB delivers end-to-end business, financial and accounting solutions direct to businesses employing between 0 and 1000 employees, alongside a network of accountants, bookkeepers and consultants. For more information visit myob.com or follow MYOB on LinkedIn.
About MYOB Business Monitor
The MYOB Business Monitor researches business performance and attitudes regarding areas such as profitability, cash flow, pipeline work, technology usage and the government. This report presents the summary findings for key indicators from the MYOB Business Monitor comprising a national sample of 1,001 business owners, managers and directors (operators), conducted from November 8th to December 5th, 2022. The businesses participating in the online survey were both non-employing and employing businesses. All data has been weighted by industry type, location and number of employees, which are in line with the Australian Bureau of Statistics (ABS - Counts of Australian businesses, including entries & exits - 8165.0).