November SME pulse records slight downtick: ASBFEO
The Australian business environment has remained well below the long-term average, according to the November Small Business Pulse.
The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) has launched its Small Business Pulse for November, revealing a slight dip in the business environment.
This month, the ASBFEO pulse dropped 0.1 per cent, the ninth consecutive fall over the last 12 months, resulting in a total decline of 1.4 per cent.
Ombudsman Bruce Billson said the fall represented a levelling out compared to previous quarters.
“While the small business operating environment remains weak, there are early signs of increased interest in growth and innovation initiatives for existing small businesses and increased enquiries about starting new businesses,” Billson said.
“Small business is the beating heart of our communities and our economy and the greatest renewable resource in our country is the perpetual optimism of small business people.”
The ASBFEO said the Small Business Pulse was designed as a health check of objective vital signs for small businesses as well as taking into account the “animal spirits” that drove decision making.
The pulse revealed conditions had been rough for SMEs with the post-COVID-19 business environment 25 per cent below the long-term average.
The cost-of-living crisis remained the biggest concern for small businesses, having negatively impacted the cost of doing business, labour and business essentials, such as freight and insurance.
Billson said there was an increasing number of small business owners looking for affordable business continuity insurance heading into summer’s heightened risk of natural disasters.
“Although interest rates have remained on hold for years, the cost of finance remains high and small business owners are researching their financing options,” he said.
“These queries are mainly considering refinancing to reduce interest costs and options for tapping into business owners’ personal funds or other ‘internal’ funding. A small subset is seeking financing to keep their business afloat.”
According to the pulse, tightening trade credit and extended payment times from other businesses had continued to weigh on small business operating conditions.
The ASBFEO said two in five of the cases that contacted them would involve a payment dispute that could put an unpaid small or family business with modest cash reserves “in a precarious position.”
A modest turnaround for small businesses that had considered hiring staff despite the tight labour market was also observed.
Billson said the indicators of a modest uplift in optimism were also reflected in increased queries from people considering starting a new business.
“This interest is particularly high in sectors that do not require significant initial capital outlays such as professional services.”
“People are increasingly looking to artificial intelligence to help him kick start their entrepreneurial journey by generating business plans.”
The pulse also reflected an increase in cyber insurance and digital platforms to connect and sell to customers.
Corporate insolvencies continued to rise in November, with small businesses restructuring processes accounting for one in five insolvencies over the last 18 months. This rise would likely continue as queries from small business owners about small business restructuring remained elevated, Billson said.
About the author
