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CAUTIOUS SMALL BUSINESSES PREPARE FOR ECONOMIC DECLINE
More than half ( 52 %) of Australian small and medium enterprises ( SMEs ) believe the country will be in recession within the next 12 months and 57 % believe the economy will decline in the coming year , according to the latest MYOB Business Monitor .
The survey of 1,000 SME owners and operators , released bi-annually by MYOB , found businesses are taking action to deal with the rising cost of doing business . The most common ways they ’ re doing so are by making a less ( or no ) profit ( 31 %), passing on cost increases to customers ( 30 %) and dipping into savings ( 24 %).
Preparing for uncertainties ahead won ’ t necessarily make it easier for the nation ’ s 2.4 million SMEs , who have already faced a challenging few years .
“ For the first time since the onset of COVID-19 , the pandemic didn ’ t make the top five pressures facing SMEs ,” said Emma Fawcett , General Manager of SME at MYOB . “ Instead , the main concerns are fuel prices , cost of utilities , interest rates , price margins and profitability and cash flow . These are all indicative of the current economic environment and provide insights into what businesses will be thinking about in 2023 .
“ While that might not be great news for the economy overall , making prudent decisions may help them to navigate difficulties ahead . The challenge will be how to balance that caution with enough confidence to keep their business thriving .”
SME concerns about the coming year can be seen in many of the latest MYOB Business Monitor findings . Under one-quarter ( 24 %) of respondents expect their revenue will be down this time next year , compared to 13 % this time last year . Just 39 % plan to increase prices and margins on products and goods sold : the most common investment increase for this year .
“ At the start of 2022 , we saw released a report on SME resilience , which found small businesses were holding onto higher cash reserves to protect themselves following significant upheaval ,” said Fawcett . “ These latest MYOB Business Monitor findings indicate we may see similar behaviour in 2023 and beyond .” �
“ Tellingly , these pressures centre on immediate business operations concerns , rather than looking at investment for future scaling or growth . It suggests that businesses are focused on the most pressing and current challenges , rather than making bold , confident decisions about the future .”
Even without the heightened unease around COVID-19 , SMEs have had other external factors to contend with throughout the last 12 months . As well as an increase in cost of living , 24 % of respondents have been impacted by natural disasters . That percentage rises to 30 % for SMEs based in New South Wales .
“ Australian SMEs are resilient and have made the best of another extremely challenging year . Lessons taken from the pandemic will hold small business owners in good stead , though it ’ s likely left many feeling uneasy . In fact , 65 % of respondents said the pandemic made them more conservative or cautious in their planning ,” added Fawcett .
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