Just over half of small to medium sized businesses are optimistic about their future especially those based in NSW (66 percent) and Victoria (49 percent), with Queensland and South Australia close behind.
The latest KPMG Enterprise client survey also shows if they have the means, they’re looking to harness technology and innovation to keep ahead of the game. They know this will give them a distinct advantage over their competitors and enable them to ward off disruptors. Not only are they investing in tech but they’re looking outwards to new markets: 41 percent considered overseas expansion as definite or a distinct possibility.
Businesses owners reported they are finding it more difficult to secure a loan, with 30 percent of mid-sized businesses experiencing difficulties. Companies obviously need loans to grow and without a change in lending, this result suggests their optimistic outlook may be reviewed over the next 12 months.
What is clear is there is a strong correlation between the downturn in the housing market and business confidence. Those who were greatly or somewhat affected by the downturn in housing were also more likely to be pessimistic about the future of their business, relative to those with an optimistic outlook (61 percent versus 35 percent). This downturn has affected almost half of respondents, a worrying trend when it comes to also feeling positive about personal finances. My mid-market clients who can afford to do so are adopting a ‘wait and see’ approach: they have decided to bide their time until the housing market drops even further before investing in real estate.
The government has put forward a number of initiatives to help small business, but surprisingly the $20,000 instant asset write-off scheme is yet to show an impact, with only 5 percent of our survey respondents reporting a positive outcome.
Similarly, measures to tackle the Black Economy and reduce tax avoidance announced at last year’s Federal Budget – again aimed predominantly at the mid-market – were reported by 86 percent as having had no direct impact as yet on their organisation.
The Enterprise Pulse Check shows that, compared to other countries, clients also believe Australia remains highly taxed and are urging both sides of politics to reassess our current tax structure to galvanise businesses that need help most.
Clients also feel R&D support and incentives are diminishing and governments of every persuasion should do more to encourage international expansion. They complain about red tape and regulatory burdens. They grumble that the climate for entrepreneurs is challenging and that the business ventures of the future should be fostered.
But despite everything, they still say they feel ‘cautiously optimistic’.
What remains clear is that the mid market is resilient and resourceful. Often referred to as the “engine room of the nation’s economy”, employing nearly a quarter of all Australians and responsible for almost 40 percent of Australia’s business revenue, mid-market enterprises will take economic uncertainty in their stride and are capable of seeing the blue skies behind the clouds.