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1 in 4 SMEs predicts revenue decline

Maja Garaca Djurdjevic
Maja Garaca Djurdjevic
22 April 2021 1 minute readShare
SMEs predicts revenue decline

The proportion of SMEs expecting their revenue to decline has hit a new high at a critical moment on the road to long-term COVID recovery, new data has revealed.

One in four small businesses has forecast a revenue drop off the back of lockdown challenges in Victoria and issues in hard-hit sectors, new research by ScotPac has shown.

According to the finance firm’s SME Growth Index, while almost half of the 1,253 business owners polled anticipate positive revenue growth for the next six months, one in four foresees a decline.

This uneven recovery varies significantly by state and sector, with research also pointing to more marked revenue uncertainty at the smaller end of the SME sector, as $1 million–$5 million revenue SMEs feel the brunt more so than their $5 million–$20 million revenue counterparts.

“Overall, the small business sector has rebounded well, considering the depth of the challenge the pandemic created,” ScotPac CEO Jon Sutton said.

“But many SMEs are not out of the woods yet. There’s much uncertainty about the long-term pandemic recovery path for those SMEs weaning off government stimulus or coping with sector-specific challenges, in particular tourism, accommodation, retail and restaurants.”

The hardest-hit SMEs are based in Victoria, with ScotPac’s research revealing only 10.5 per cent are forecasting growth, while a full 63 per cent believe their revenue will drop.

Businesses based in Western Australia are most bullish, with as many as 84.5 per cent predicting positive growth by an average 6 per cent. Contrary to Victoria, only four in every 100 WA businesses expect a decline.

In NSW, the situation is a little more concerning, with almost one in 10 admitting they would close if current conditions continue, while one in five is considering selling.

Outside of tourism hotspots, Queensland SMEs have been relatively unscathed, ScotPac said. In fact, almost half expect a modest revenue increase.

Similarly, SMEs in South Australia and the Northern Territory are quite bullish, with 73 per cent expecting growth and 9 per cent bracing for decline.

“For the businesses facing uncertainty, and needing reliable cash flow, it’s crucial to focus on getting expert advice and putting in place sufficient funding to support recovery and growth,” Mr Sutton concluded.

1 in 4 SMEs predicts revenue decline
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Maja Garaca Djurdjevic
Maja Garaca Djurdjevic

Maja Garaca Djurdjevic is the editor of My Business. 

Maja has a decade-long career in journalism across finance, business and politics. Now a well-versed reporter in the SME and accounting arena, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies and enabling citizens to influence decision-making.

You can email Maja on [email protected] 

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