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Vic businesses shaken but not stirred

June 30, 2011

Weak consumer spending has given Victoria’s small businesses the jitters, according to the Sensis® Business Index released today, but they remain optimistic about the long-term prospects.

 Report author Ms Christena Singh said the business confidence indicator had fallen sharply during the past quarter in Victoria, as it had in many other states and territories.

 “Victorian businesses have been shaken by a patchy quarter of trading and there are expectations for worse conditions over the coming quarter.

 “Taking a national perspective, however, Victoria has not fared so badly. Victoria achieved the nation’s highest sales, employment and profitability performance this quarter,” Ms Singh said.

 “And when we look at the longer-term 12 month trend, Victoria’s small businesses are quite buoyant,” Ms Singh said.

 Victorian small businesses hold the nation’s most optimistic views about the future state of the Australian economy. They are also expecting the nation’s strongest sales (along with South Australia) and profitability results for the year ahead, and are least likely to report having any problems in their business.

 Given the topical nature of a proposed carbon tax in Australia, the Sensis® Business Index also asked Victorian small businesses specifically about their views.

 Thirty-one per cent of Victorian businesses said they did not understand the proposed carbon tax, while 52 per cent said they partially understood. Seventeen per cent said they had a thorough understanding.

Fifty-one per cent of Victorian small businesses said a carbon tax would have a negative impact on their business, while 44 per cent believe it would have no impact. Five per cent believe it would have a positive impact.

 According to the findings, Victorian small businesses are most concerned about a carbon tax impacting on costs, the Australian economy and consumer demand, with increased regulation also being a key reason.

 For those Victorian businesses that felt the carbon tax would have a negative impact on their business, nine per cent said they would consider closing or selling their business, while seven per cent would look at modifying products and services, and four per cent would decrease staff which is counterbalanced with four per cent that would hire more staff.

 The Sensis® Business Index found that support for the Victorian Government increased further this quarter, making it again the second most supported state or territory government.

 The key reasons small businesses support the Victorian Government’s policies include perceptions it is:

·       more supportive of small business

·       doing a lot of infrastructure development

·       trying to help small business.

 Key Victorian findings from the June 2011 Sensis® Business Index:

·         Business confidence fell from 56 per cent to 39 per cent (28 per cent nationally)

·         Profitability remained unchanged at zero per cent (negative14 per cent nationally)

·         The sales indicator fell strongly, down seven percentage points to negative three per cent (negative14 per cent nationally)

·         Overall employment by Victorian small businesses grew strongly during the quarter, taking the indicator to nine per cent (one per cent nationally)

·         Sixty-one per cent of Victorian businesses said they have problems in their business (70 per cent nationally).