According to the latest MYOB Australian Small Business Survey, despite the majority of small business owners believing that their business is currently performing quite or very well now, only 50% believe their business will perform better than now over the next 12 months. This is down from 65% in November 2007 and is the lowest result in future performance outlook in the past four quarters.
“While the fieldwork for this survey took place just before the current instability, it shows that small business owners were already becoming more pessimistic about their future” explains Tim Reed, CEO of MYOB.
The latest MYOB survey shows that small business owners remain disappointed with the Federal Government’s contribution towards the development of small business.
When asked to rate the current performance of the Federal Government in helping the development of small business, 56% of small business owners reported a poor or very poor performance. This increased from 37% in November 2007 (with the change of Government) but has remained steady since June 2008.
“Small business owners are facing tough times. With so many macroeconomic issues in flux at the moment; inflation, consumer confidence, exchange rates, changes to industrial relations laws and uncertainty in business costs, whether fair or unfair it is understandable that small business owners are feeling dissatisfied with their Federal Government,” said Mr Reed.
Rising petrol prices are hitting small business costs, with 73% of small business owners surveyed reporting their business costs have increased due to rising petrol prices. Small business owners are starting to pass these costs on to their customers, 36% of small business owners have raised or intend to raise (19% & 17% respectively) their prices due to the increase in petrol prices.
Recent volatility in global oil prices and exchange rates are making it hard to get a fix on what ‘normal prices’ are, but there appears to be general acceptance that fuel prices are settling at a higher long-term level. Interestingly the degree of indebtedness of Australian business has declined over the past two years with a decline from 45% of businesses being funded through borrowings in September 2006 to 30% now. As such many businesses are in better shape and better able to deal with any short-term declines in sales. Sadly a total of 5% of small businesses surveyed are likely (yes/maybe) to default on loans in the next 12 months, with business owners in South Australia and NSW indicating they are the most likely to default.
Mr Reed said, “Businesses who are anxious about their ability to repay these loans, should seek professional advice from an accounting professional. They will bring an expert’s perspective, can help a business owner consider many scenarios (‘What if…’) and can also help the business owner with important discussions with financiers and the ATO.” “Many business owners only use their accountant for tax advice and tidying up their business history. They could really benefit from engaging their accountant to help them plan their business future, and ensuring their business is fit for whatever economic conditions lay ahead".