Bankwest has released its Future of Business report for July, revealing an insight into the expectations of small and medium-sized enterprises Australia wide.
Three in five business leaders expected the Australian economy to speed up in the next five years, while only 22.3 per cent expect a slowdown, according to a report released by Bankwest today.
The Future of Business survey revealed an insight into the expectations, cash-flow challenges and growth strategies of small and medium-sized enterprises Australia wide.
Bankwest chief economist Alan Langford said that, despite subdued expectations in the near term, the survey showed a stronger climate in the future.
“There’s quite a disconnect between the short term, where it’s not so rosy, and the long term,” he said.
The survey was taken in May before the federal budget, but Mr Langford believes there has been some improvement since then.
“Conditions, which were lagging confidence for some time, have come back as well,” Mr Langford said.
Diversification through new products/services and markets registered as the most common plan to deal with future cash-flow challenges, with more than half of those surveyed seeking to implement new products and services whilst 49.4 per cent will opt to expand into new markets in the next five years.
Cash-flow challenges in the next 12 months included operating costs (55.3 per cent), reduced revenue (40 per cent), losing a customer (35.3 per cent), and increased competition (34.1 per cent).
Over the medium term, government red tape was an issue for 38.8 per cent.
Around 40 per cent of business leaders looked to increase or maintain borrowing in the next 12 months, rising to 48.3 per cent over five years, with market leaders and businesses in their growth phase more likely to do so.
That financing would be used by 45.9 per cent for growth, 29.5 per cent for working capital and 14.8 per cent for paying down loans.
Mr Langford said that outlook was positive, but there would not be a return to the borrowing levels of the last decade.
“The credit binge of 2002 to 2007 is long gone,” he said.
“We’re trying to look beyond some of the big headlines about the end of the resources boom … how businesses are responding to the challenges.
“Businesses are prepared to be innovative and look forward with confidence in the long term.”
