SME growth sentiment trends down amid cashflow and funding concerns

New research from the Scottish Pacific SME Growth Index report has outlined that SME owners are working up to 80-hour weeks and are losing sleep about cashflow.

The report – which since September 2014 has engaged specialist research firm East & Partners to conduct six monthly polls of 1,200 small-to-medium enterprise leaders across all states and key industries – found that SME confidence had taken a hit in its most recent edition, despite the resilience of the sector. For the first time since the index began, SMEs forecasting positive growth (48.4 percent) are outnumbered by SMEs forecasting negative growth or no change (51.6 percent).

“Over the past two years, SMEs predicting revenue decline have almost doubled (13.2 to 24.2 percent), while those predicting increases have halved their growth forecasts (8.6 to four per cent),” Scottish Pacific CEO Peter Langham said.

“The current environment is clearly placing pressure on Australia’s small-to- medium business community. SMEs nominated cashflow as the most stressful element of business. They cited credit conditions as a key barrier to growth. With the index highlighting that cashflow keeps 72.5 per cent of respondents awake at night, it’s crucial for these leaders to find the right funding to support their business.

“Businesses are increasingly looking beyond the banks to fund growth and to help ease cashflow concerns. From this time last year, there has been a 30 per cent increase in SME owners planning to fund their growth using a specialist non-bank lender, with one in five now indicating their intention to do so,” Mr Langham said.

SME Growth Index surveying took place in July and August, in the aftermath of the Federal Election and UK Brexit referendum. While uncertainty around these events may have influenced some responses, Mr Langham says the results were a timely reminder to governments, industry bodies and financial institutions of the importance of having the right regulatory and funding systems in place to stimulate and support the nation’s vital SME sector.