Lack of customers, capital and staff are what worries Australian small businesses most, says a new report.
Small businesses are being hit in both directions, with supply and demand variables impacting operations, according to the March Sensis Business Index released today (March 4).
The quarterly survey began in 1993 and provides the latest snapshot of small and medium enterprise (up to 199 employees) business activity in Australia. It is based on a sample size of 1,800 from metropolitan and regional areas, interviewed between 1 and 16 February 2010.
Report author Christena Singh said small businesses were experiencing weak consumer demand, as well as difficulties finding staff and accessing credit.
“During the quarter, the landscape has generally deteriorated for Australian small businesses," she added.
“However, the trading environment remains much more favourable than it was 12 months ago at the height of Australia’s economic downturn when business confidence was at a low.”
After rising over the last nine months, profitability has weakened slightly during the quarter. Nevertheless, profitability amongst small businesses is considerably higher than this time last year.
With less government stimulus in the marketplace, consumer demand also fell strongly during the quarter. The sales indicator has been driven into negative territory for the first time in nine months, but also remains well above the lows experienced 12 months ago.
Employment by Australian small businesses fell sharply during the quarter, reaching the lowest level recorded in the 17-year history of the survey.
“The reduction in employment can be attributed to sluggish demand. However, this is only part of the explanation, as small businesses are also experienced greater problems finding and keeping staff,” Singh explained.
Overall, the greatest problems experienced by small businesses are lack of sales, cash flow, the economic climate, and finding and keeping staff. Almost one in ten small businesses are now having issues finding and keeping staff.
Continuing on the supply side, small businesses are experiencing some difficulties accessing credit to fund ongoing operations or expansion. Overall, 35 per cent of small businesses feel it is relatively difficult to access finance, compared with 20 per cent that feel it is relatively easy.
Small business support for the Federal Government also fell this quarter, with the Federal Government’s approval rating now at the lowest level since November 2008.
Overall, 18 per cent of small businesses believe the Federal Government’s policies support small business, while 31 per cent believe the policies work against them, and 51 per cent feel they make no difference.