Australia’s small business owners are coping with increased stress but remain confident about prospects for growth. A new study, the Bibby Small Business Barometer by debtor finance provider Bibby Financial Services, found 52 per cent of those surveyed felt they were more stressed now than 12 months ago. Only 17 per cent reported less stress.
Bibby’s Managing Director, Greg Charlwood, commented: "The uncertain economic outlook is creating increased anxiety among proprietors of small and medium size enterprises (SMEs) and is responsible for most of the specific worries that business owners identified."
The largest single source of stress was managing cash flow – having enough money coming into the business, together with back-up funding, to ensure they could pay staff and other expenses on time. The study indicated that stresses have gained pace in manufacturing and professional services more than any other industry sector in the past 12 months.
Almost half of the respondents (49 per cent) in the research, carried out by Galaxy Research on business-to-business (non-retail) small business firms, indicated cash flow as their biggest headache. This is closely followed by staffing issues. Three issues vied for third place among the most significant headaches: difficult market conditions, government red tape (compliance and tax administration), and lack of time to enjoy family life.
"We found staffing was more likely to be a source of stress for companies with annual turnover of $1 million or more (51 per cent) than with those earning under $1 million (39 per cent)," Mr Charlwood said.
Optimism about growth, despite the challenges
Despite the challenges they face, half the proprietors surveyed report their businesses are growing. A further 29 per cent are faring just as well now as 12 months ago, but 21 per cent are contracting.
"Small business proprietors are optimistic and 71 per cent are confident about the prospects over the coming 12 months. This is reassuring, as small businesses are the growth engine of our economy and the sector that employs the most Australians," Mr Charlwood said.
Almost two thirds expect strong to moderate sales growth over the coming 12 months. In contrast, only 10 per cent are pessimistic and expect a decline. The most optimistic sectors are manufacturing and professional services, with wholesale, trade and transport businesses more pessimistic.
"Proprietors’ optimism about the future prevails despite their biggest headache, cash flow, worsening for many of them. The main reason for this is that the payments situation has degenerated. Forty-seven per cent now wait longer to be paid for the goods and services they have sold than they waited at this time last year. Only 8 per cent enjoy more prompt payment," Mr Charlwood added.
"This is one of the main reasons Bibby has seen inquiries and demand for debtor finance increase substantially. Businesses are looking for flexible ways to meet cash flow needs, and our service provides almost immediate finance when they bill their clients, without the need to provide their home or business property as collateral. This overcomes cash flow problems caused by slow payments," Mr Charlwood said.