A third of SMEs have suggested government policies will be the biggest impact on their business in 2018, meaning this year’s federal budget could be a make or break for many operators.
According to a national survey of 1,150 business owners by accounting provider Reckon, the three major challenges facing SMEs, in order, are declining customer demand, government policies and cash flow fuelled by the lack of late payments legislation.
Meanwhile, more than half (54 per cent) revealed they fear being left behind in the digital economy due to slow internet speeds, and 83 per cent believe the government will fail to deliver the NBN in full by 2020.
With these challenges front of mind, Reckon’s managing director ANZ, Sam Allert, suggested it is no wonder that SMEs rate better tax offsets and improved internet connectivity to support an omnichannel presence as the two most desired measures from the federal government.
“The Australian small business landscape has undergone massive changes in the past few years alone, the most major being the shift from traditional bricks and mortars to online. With that, local businesses now find themselves having to compete in the global marketplace,” Mr Allert said.
“For small businesses to survive and thrive online in the presence of global players… not only do they require a more robust and reliable technology infrastructure, they [also] need to become more digital-savvy.”
And with declining customer demand chief among their concerns, it is disconcerting that a third of SMEs said government policies will be the primary force impacting their business.
One long-overdue measure the government could introduce to boost SME confidence and sustainability, Mr Allert noted, is to legislate standard payment terms, particularly given that state governments and multinationals are the nation’s worst payers.
“Cash flow is one of the highest ranked pain point that keeps small businesses up at night, and it is no secret that they still struggle to get their loans approved by traditional lending sources,” the managing director said.
“The majority of Australian small businesses have a general payment term of 30 days for good reason — without a healthy cash flow cycle, business growth can be severely restricted.”
Reckon also found that SMEs are also concerned about the level of difficulty to set up new enterprises in Australia, with one in three stating that setting up a business in the current marketplace is a tough slog.
As such, the third most desired form of support is more incentives for start-ups, alongside the already stated need for improved internet infrastructure.
“What we need to be doing as a nation is enhance our overall technology capabilities. To achieve this, there needs to be a concerted effort between the government, private sector and small businesses,” Mr Allert said.
“In addition to better incentives and greater investments from the government to build up our infrastructure, technology providers can also play a part by educating, upskilling and providing small business owners with the digital know-how to innovate and, ultimately, effectively compete against global brands.”
Analysis: The misnomer of bank regulation and loan costs
By Adam Zuchetti
Analysis: Bank ‘misconduct’ a woeful understatement
By Adam Zuchetti
Analysis: Banks wrongly targeted as business custodians
By Adam Zuchetti