The latest MYOB Small Business Survey indicates that more than half (58%) of Australia’s small business owners surveyed expect the Australian economy to perform worse than now over the next 12 months. This is an increase from 49% in September 2008.
Reflecting this concern for the economy, 53% of business owners believe Australia will experience a recession in the next two years. This is an increase from 40% reported in the March 2008 Survey.
According to Tim Reed, CEO, MYOB, the global economic events of the past three months have started affecting the confidence of small business owners and increased their fears of a recession. The current survey results show an increase of 10% in ‘unsure’ responses from small business owners.
In spite of this future outlook for the Australian economy, small business owners remain confident about the current performance of their own business with 73% feeling that their business is currently performing well.
However when thinking about the performance outlook over the next 12 months, only 44% of small business owners surveyed believe their revenue will increase over the next 12 months. This is down from 53% in September 2008 and 58% in June 2008.
According to Reed, though small business owners have indicated they are confident with their business’s current performance, they are now becoming more pessimistic about their future.
With this decline in performance outlook for small business owners, the recent Federal Government announcement of a 20% cut in the next quarterly PAYG tax instalment for small business owners will be a relief.
While under half (47%) of small business owners surveyed report of a poor contribution to the development of small business by the Federal Government, there has been a 9% decline in this negative performance rating of the Federal Government since September 2008.
The announcement of the December economic stimulus package made in October, combined with the interest rate reductions seem to have shed some positive light on the Federal Government and contributed to the improvement in this negative rating.
Considering the current economic issues, small business owners surveyed indicated that they are most concerned about business costs, petrol prices, business profit and cash flow.
However, there are still healthy levels of optimism, about half of all small business owners surveyed maintain a positive outlook for sales, customer relationships and profitability. By their nature small businesses are more flexible and can react more easily to changing business conditions than larger businesses.
While the majority (88%) of small business owners surveyed believe it is important to plan for a potential recession, only 29% have actually sought advice on recession planning.
According to Reed, small business owners who are concerned about their business should seek professional advice from a financial adviser or accounting professional. They can assist with business planning, shed light on areas of belt tightening and help with ‘what if’ scenarios that a business owner may not have considered.