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ACA monthly SME COVID tracker report: Small businesses find hope

ACA Research’s monthly SME COVID tracker report shows that despite revenue and employment data remaining weak, SME decision-makers are feeling hopeful for the prospect of opening up by Christmas

SME sentiment has shifted

As the majority of Australians remain under lockdown, small businesses continue to struggle.

Sentiments amongst decision-makers remain on a knife-edge, with more than 50 per cent of decision-makers concerned about their businesses survival. 

However, this number has fallen compared to last month, showing decision-makers are more optimistic about the future. At the same time, the number of businesses for whom survival is not a concern has grown. The business community has gained confidence as the prospect of opening up becomes more and more likely. 

James Organ, the managing director of ACA Research, said, “The uplift in sentiment and confidence is applicable to all States. Obviously, the direct impact of lifting lockdowns in NSW and VIC will impact SMEs in those states, but other states are dependent on strong economies in the larger states and hence confidence is also linked to the reopening.”

Impact on revenue

Revenues have worsened this month, with 57 per cent of businesses reporting a decline in revenue. Overall, this represents an average revenue loss of 22 per cent when compared to August. With the hope that lockdowns will end sometime soon, 24 per cent of SME decision-makers predict that their revenue will increase in the coming month. 

All states included in the survey recorded a fall in mean revenue throughout August. SMEs in New South Wales have been hit the hardest, with an average decline in revenue of 30 per cent. Profits margins also fell across the country, with 38 per cent of SMEs reporting lower profits. 

Falling profits are part of a worrying trend that has not seen average losses amongst SMEs drop for four months (excluding a slight decrease in June). Profit and revenue figures include government stimulus and support measures. 

Despite the continued downward trend in revenues and profits, SME decision-makers are more optimistic about the long term survival of their ventures. Seventeen per cent of SMEs were not concerned with the survival of their business; this is the highest level seen since the beginning of the pandemic. 

“Longer-term confidence is dependent on the economic rebound over the next few months as lockdowns and restrictions are removed. The number of cases and deaths post lockdowns will also have an impact,” said Mr Organ.

Lockdowns 

Lockdowns are impacting business revenue and profits. Not only are states in lockdown affected, but the effects of reduced trade are also being reported across the country. 

Staff numbers fell in September, with 33 per cent of SMEs reporting a decline in staff numbers. Only 21 per cent of businesses were hiring in September, the lowest reported number since March. At the same time, the data shows that companies trying to hire found it more difficult in September than in August. SMEs said that just under half of their current team remained working from home.

Overall, SME confidence in revenues and economic conditions has grown as the end of lockdown fast approaches. Twenty per cent of SMEs now believe economic conditions will strengthen over the next three months. 

The report stated, “Expectations regarding economic conditions over the next three months are also more positive, again reflecting a slight lift in optimism associated with the imminent lifting of lockdowns.”

Government support

ACA’s report found that approval of government support and handing increased slightly on last month’s data. Forty-three per cent of SME decision-makers now feel the Federal Government response has been inadequate, representing a 2 per cent drop on August’s figures. 

In NSW, businesses felt more satisfied with the state government response, whereas, in Victoria, the satisfaction with state government fell by 10 per cent. The report stated, “Negative sentiment in NSW has also plateaued, but once again the popularity of the VIC Government has nosedived with the latest lockdown.”

The report found that 44 per cent of SMEs were able and willing to access government support; this is a 4 per cent increase on data from August. 

  • 61 per cent of SMEs felt they didn’t qualify for the JobSaver Payment
  • 63 per cent of SMEs thought they didn’t qualify for COVID-19 Small-Medium Business Grant.

Mr Organ said,” I think the general feeling is that we are past the worst of the pandemic, but many are on the edge financially and hence the reopening process may cause many a greater level of stress as they once again invest in the future with no guarantees of an economic recovery or Government support.

Other key findings 

  • SME decision-makers concerns around health and wellbeing remain elevated. The reopening process could ignite further stress for many of these respondents, but hopefully this negative trend will reverse in the near term.
  • In line with lower capital expenditure, the demand for finance continues to decrease. Demand for finance to support cash flow/working capital remains high.
  • Growth expectations continue to retrace with only 10% looking to expand over the next 12 months. Hopefully, these numbers will reverse once lockdowns end.
  • WFH productivity levels continue to decline, with 26% of SMEs reporting less output compared to 16% in June. In contrast, only 16% report better productivity which is the lowest level recorded since the inception of the research. 
  • As a result, 17% of SMEs have temporarily or permanently closed. However, this is slightly more positive compared to the 23% reported in August.

Read more:SME confidence suffers under lockdowns: ACA monthly SME COVID tracker report

Read more:SMEs continue to feel a COVID-19 sting: New ACA research

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