The issues keeping SMEs up at night

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SME owners are working up to 80 hour weeks, are losing sleep about cash flow and almost one in four are predicting revenue to decline through to the end of 2016, according to results of the Scottish Pacific SME Growth Index released today.

Since September 2014, the Australian capital finance provider has engaged specialist research firm East & Partners to conduct six monthly polls of 1200 small to medium enterprise leaders across all states and key industries.

Scottish Pacific CEO Mr Peter Langham said the latest results show that SME confidence has taken a hit despite the resilience of the sector, which according to ABS statistics employs almost half of the 10.7 million Australians in the workforce.

“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 4 percent),” Langham said.

SMEs predicting positive growth now in minority

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).

“The current environment is clearly placing pressure on Australia’s small to medium business community,” Langham said.

Issues keeping SMEs up at night

The top three concerns were cash flow (72.5 percent), not having enough time to get things done (55.2 percent) and customer or supplier issues (39 percent). 17.3 percent were worried about disruption of their business model, and 13.3 percent cited staff issues.

“SMEs nominated cash flow as the most stressful element of business. They cited credit conditions as a key barrier to growth,” Langham said.

“With the Index highlighting that cash flow keeps 72.5 percent of respondents awake at night, it’s crucial for these leaders to find the right funding to support their business.

SME owners putting in long hours

A 50+ hour week is standard for most SMEs (88.8 percent). Almost half of SME owners and senior managers (43.7 percent) are spending 60 to 80 hours a week working on their business, which equates to 12+ hour days, six days a week.

Double edged sword of technology

Almost half of SMEs (44.6 percent) believe mobile and digital technology has had a negative impact on their work/life balance. Only 15.7 percent of small businesses believe it has led to better work hours or flexible working conditions.

New products and services plans on hold

Almost half (48.9 percent) of SMEs report no plans to introduce new products and services during the second half of 2016, up from 33.7 percent a year ago. This may have been influenced by uncertainty following the Federal Election.

Interest in non-bank lending increasing

Since September 2014 there has been a steady increase in SMEs looking to borrow from specialist non-bank lenders. This has become more marked in the past year: 19.6 percent plan to fund their growth using a specialist non-bank lender, a 30 percent increase from the figure of 15.1 percent in Sept 2015.

“Businesses are increasingly looking beyond the banks to fund growth and to help ease cash flow concerns. From this time last year, there has been a 30 percent 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,” Langham said.

Entrepreneurs still positive

Australians are still keen to start their own business, despite barriers and tough conditions. The Index shows one in 10 SMEs are in start-up phase, a consistent figure since data was first collected in September 2014.