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Are brokers in New South Wales hearing different business sentiment from their SME clients, compared to their broker counterparts in WA?
The answer seems to be yes, there are differences in small-business sentiment across every state in Australia, according to the results of our most recent Scottish Pacific SME Growth Index.
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Of course, there are similarities in many of the issues for small businesses across Australia – from agreement on the top three barriers to growth (high taxes, credit conditions and red tape) to the top three key drivers behind their growth (great people, core customers and good industry networks).
However, when we drill down into the SME Growth Index responses from more than 1,200 small-business owners and senior managers, it is clear there are differences from state to state.
NSW and ACT small-business owners and managers are the most positive about their business growth prospects. For the next six months, they are estimating a 5.8 per cent average growth rate, compared with the SME Growth Index national average of 3.9 per cent. This may be on the back of a strong property market, the robustness of Sydney’s professional services industry and the relatively lower exposure to the resources industry.
Also, those SMEs that have looked overseas for growth opportunities are now benefiting from a lower Australian dollar.
However, the mood amongst their SME colleagues in Western Australia is nowhere near as buoyant.
The wild highs of the resources boom years seem to have receded, with Western Australian SMEs by far the least confident about their business prospects in the next six months, predicting an average of only 2.1 per cent growth.
Here’s a snapshot of each state:
• 11.5 per cent of NSW/ACT small businesses were planning to expand geographically within the domestic market in the next six months. Another 4.9 per cent were planning for overseas expansion, while 8.8 per cent were planning both domestic and overseas expansion (8.4 per cent is the national average) – perhaps taking advantage of the growing export opportunities and available funding for SMEs in this space.
• Small businesses in South Australia and the Northern Territory were the next most optimistic, predicting an average of 5.1 per cent growth. The index showed that 9.6 per cent of SMEs in these areas were planning to expand domestically in the next six months, with 3.6 per cent flagging overseas expansion, while 7.8 per cent were planning both domestic and overseas expansion.
• Queensland small businesses were the third most positive (predicting an average of 4.7 per cent growth). This state had the highest percentage of SMEs looking to expand domestically in the next six months (11.6 per cent), but was just under the national average for international expansion (4.4 per cent). Eight per cent were planning both domestic and overseas expansion.
• Victorian and Tasmanian SMEs were the second most pessimistic about growth prospects, predicting a short-term average of 3.5 percent growth. Small businesses in these two states were under the national average in all three expansion categories (10.7 per cent planning domestic expansion, 3.7 per cent planning overseas expansion and 7.7 per cent planning both domestic and overseas expansion).
• In Western Australia, 9.6 per cent of small businesses were planning to expand geographically to other domestic locations in the next six months, 3.6 per cent were planning for overseas expansion and 7.8 per cent were planning both domestic and overseas expansion.
So what does this mean for brokers in each state? Some may have to look harder than others for business, but wherever you are, there is a role for brokers to provide information and support to help SMEs grow.
As a business that provides day-to-day working capital of trade finance and receivables finance for more than 1,000 SMEs in a range of industries across Australia and New Zealand, the results we see from the SME Growth Index show us how important it is that SME owners are aware of the range of funding options available to them to support growth.
Scottish Pacific is committed to continuing to provide a voice to highlight the issues facing Australia’s small-business community, and I hope that the index continues to offer brokers all around Australia a valuable insight into many of these issues.
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