SMEs name open borders as the key for small business recovery
Australian small business owners have overwhelmingly named open borders as the top factor needed for them to rebound from the Covid-19 recession.
In the latest twice-yearly ScotPac SME Growth Index research, having open borders was nominated by almost two-thirds (64%) of SMEs as their most needed recovery factor.
The research is conducted twice a year by East & Partners on behalf of ScotPac, Australia’s largest non-bank SME funder, and polls 1252 owners or senior leaders of small businesses across major industry sectors around Australia.
ScotPac CEO Jon Sutton said the call for open borders, when SMEs were polled in September and October, was consistent across small business respondents no matter their state, business size or industry sector.
“Given the Covid-19 spikes first in Victoria, then South Australia and now NSW, and the varied way the states are dealing with border closures, it’s clear that the small business sector sees a unified approach as the way out of trading difficulties caused by the pandemic,” Mr Sutton said.
“On top of this, a further 25% of small businesses went beyond the survey response options and wrote in that their biggest recovery factor would be reducing state power and giving the federal government greater control.
“Of their own accord, small businesses wanted a more federal approach to the pandemic.
“This is primarily a call for open borders and reducing the power of the states to make decisions that impact the national economy.”
Top four SME challenges and top three positives for 2021
When asked what they are most positive about for 2021, the most common response was getting “back in the black” (24%), and the corresponding factor of reducing debt levels (21% wrote in this response). Almost one in five small businesses (17%) named their plans to relocate or enter new domestic markets as the most positive factor for 2021.
Younger businesses (under 12.5 years) were much more likely to express positivity than their older SME counterparts about entering new domestic or international markets and releasing new products or services.
“This may be due to a view by the owners of these younger businesses that if they can ride out 2020 they can survive anything. Whereas the owners of older businesses may be more conservative and keeping their focus on dropping debt,” Mr Sutton said.
The top four challenges SMEs feel they must overcome in 2021 are: servicing excessive debt levels (22%), diversifying their funding base/finding new sources of funding (16%), securing or increasing their customer base (16%) and avoiding insolvency (11%).
“The research clearly showed that established SMEs were much more likely to have strategic planning in place than younger businesses,” Mr Sutton said.
“This, along with the result showing SMEs either have made or are considering a change in direction about their pre-pandemic funding arrangements, highlights the importance of small businesses seeking qualified, expert advice,” he said.
“It’s clear that small business owners, and their advisors such as their accountants and brokers, need to be making hard decisions about business structure, strategy and finding new and improved ways to fund the business for 2021 and beyond.”
*About the SME Growth Index Twice yearly since 2014, East & Partners on behalf of ScotPac interviews a representative sample of Australian SMEs – the owners, CEOs or senior financial staff of 1252 businesses across a range of industries and all states, with annual revenues of $A1-20m. This round, the interviews took place over four weeks, ending October 9 2020.
