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Small businesses down but not out

March 06, 2012

Weak consumer spending has many small and medium businesses rattled, yet very few are considering shutting up shop, according to latest Sensis® Business Index.

Report author Ms Christena Singh said after a strong boost in the previous quarter, business confidence has fallen again.

“While we are not seeing anything like the low levels of six months ago, business confidence is considerably down on this time last year,” Ms Singh said.

Overall, three in 10 businesses are worried about their prospects for the year ahead, including one in 10 that are extremely worried. Five in 10 are confident and the remainder are neutral.

“We are also seeing fewer businesses looking to close or sell their business than six months ago,” she added.

Currently 11 per cent of small businesses are planning to sell or close their business, down six percentage points from six months ago.

“In fact, almost half of businesses are still aiming for growth, and many are planning business strategies to grow their business despite what they perceive are comparatively adverse economic conditions,” she explained.

Forty-three per cent of small businesses said they were planning to increase their digital presence during 2012, while 42 per cent are planning to introduce new products and services and 34 per cent are expecting to develop a business plan.

Consumer demand did improve slightly during the quarter, but the sales indicator remains strongly in negative territory. Employment by small businesses overall continued to deteriorate during the quarter, while the profitability indicator was unchanged and also in negative territory.

“Small businesses are also telling us that they feel it is currently difficult to access the finance necessary to invest in their business, and we are seeing this manifest in weak capital expenditure trends,” she added.

Small businesses are expecting weaker trading conditions for the next quarter and for the year ahead.

The Sensis® Business Index shows support for the Federal Government’s policies improved marginally during the quarter, but remains significantly weaker than a year ago. 

The main reasons small businesses gave for not supporting the Federal Government’s policies were lack of incentives, too much bureaucracy, the introduction of new taxes and the view that the Federal Government was only concerned with big business.

Key indicators for March 2012 Sensis® Business Index: