Revenue falls cause SMB economic confidence to bottom out

Falling revenue is causing small business economic confidence to dwindle, according to new research. Despite these sales falls, a fifth of SMBs say they’re feeling optimistic that conditions will begin to improve over the next 12 months.

The July 2012 MYOB Business Monitor found just 18 percent of SMBs reported an increase in revenue in the past year, while 41 percent said revenue had fallen and 37 percent claimed to have experienced steady revenue.

The report revealed the lack of confidence among SMB owners, as less than one fifth expect the domestic economy to improve within 12 months, and almost one quarter believing any improvements were not likely in the next two years. Around 43 percent are feeling somewhat positive, believing the economy will remain steady for the next year.

According to MYOB CEO Tim Reed it’s unsurprising that confidence isn’t strong, with fewer than one in five SMBs enjoying revenue growth over the past year, and with more than two in five seeing revenue fall. It’s little wonder, he said, that the vast majority can’t see our economy improving any time soon.

“The new financial year is an ideal time for business owners to boost their potential for success by seeking smarter, more cost-effective ways of running their business,” he said.

Reed advises the $6,500 instant tax write-off for new assets, for example, can assist in the investment of new equipment that improves business productivity and cashflow. Another good way to improve cashflow is by attracting more prospective customers through a website that is included in major search engines.

“With the carbon tax introduction, there are tangible advantages for those who also take a proactive approach to reducing energy and material consumption, and lowering production costs”, Reed added.

The construction and trade industry saw the greatest sales falls over the past year, with a 52 percent loss of revenue, followed by transport, postal and warehousing operators at 49 percent. The business, professional and property services industry was the most likely to see a rise (21 percent), closely followed by manufacturing and wholesale (20 percent ).

Reed said he’s surprised by the fact that more than half the business operators surveyed – 55 percent  – will keep their prices and margins the same this year. With the carbon tax set to impact the cost of goods and services for most if not all, one in two said they wouldn’t be passing this on to customers.

“This indicates that many will simply cop carbon tax related cost increases on the chin. I encourage business owners to consider whether this is the best course of action when they’re planning how to attract and keep customers – frequently, good service rates above price in a customer’s mind. Service can allow a business to put their prices up and customers understand the need for these moves,” he added.

The report has also found 61 percent SMBs will spend the same on marketing and advertising activities as last year, while 19 percent will spend more and 12 percent will cut their spend.

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