Small business owners are feeling the impact of the global financial crisis. According to the latest MYOB Australia ’s small business survey, 43% of small business owners surveyed report that the global financial crisis has had a negative impact on sales and 39% report a negative impact on business costs.
The majority, 63%, of small business owners surveyed think that the Federal Government will announce that Australia is in recession within the next 12 months. The higher turnover small businesses are pessimistic about the immediate future of the economy. Small business owners with turnover above $1 million are likely to think a recession will be announced in the next 12 months than those with turnover under $1 million.
According to Tim Reed, CEO, MYOB Australia, Australia’s small business owners, who are usually optimistic, are losing confidence in the economy and this has impacted their confidence in the Federal Government, with 45% of small business owners surveyed believing that the Government have not considered the impact of the financial crisis on small business.
However, it would seem that this loss of confidence in the Federal Government only applies to the issue of the global financial crisis. The percentage of small business owners who have given the Federal Government a poor rating for their contribution to the development of small business in Australia has actually fallen, from 56% in June 2008 to 42% in March 2009.
When it comes to small business development overall, their attitudes seem to be shifting. The recent interest rate cut could have an impact on this. Small business owners are now responding to the financial pressures being placed on their businesses. The latest survey results reveal that as a result of the current economic climate, 42% of small business owners have cutback on business expenses, in areas such as operating costs, advertising, marketing, staff, stock levels and travel.
While small business owners are confident with their current business performance, there has been a decline in confidence for business outlook, with 43% of small business owners surveyed believing their business will perform better than now over the next 12 months. This is down from 56% in June 2008.
Industry experts are expecting further economic weakness in 2009, and if this eventuates the State and Federal Governments should explore all options to assist small businesses with their cashflow. Small businesses are the core of the Australian economy and are collectively Australia’s largest employer. Despite many small business owners feeling the impact of the global financial crisis, the majority (78%) of small business owners have not spoken with an accountant about developing a plan or strategy to ensure their business survives through a potential economic recession. The pressure is building on business owners now more than ever, business owners need to step out of the daily chaos and look at the ‘big picture’. There are many things they cannot control, they should accept those and put energy into what they can control. Business owners should not be afraid to seek help, such as talking to their accountant about ensuring their business is running as efficiently as possible, particularly in regards to staying on top of cashflow.