The latest Bibby survey shows that 52% of Australian small business owners are now more stressed that a year ago and that their major headache is their cash flow. These findings have led the debtor finance specialist to support calls for tax breaks.
With the latest Bibby Barometer index stating that Australian SMEs are now facing increased pressure for their survival and that cash flow is their major concern, Bibby Financial Services has said that it supports calls for tax breaks for small businesses and that they deserve special consideration.
“On almost all measures, small businesses have greater pressures now than a year ago. Our Bibby Barometer survey of small businesses showed they are under higher stress and have a more uncertain cash flow than a year ago. They face longer delays being paid and are coping with more difficult market conditions, staffing issues and access to finance,” said Greg Charlwood, Bibby’s Managing Director.
“Bibby’s survey and recent insolvency trends indicate the extent to which these pressures threaten Australia’s business productivity,” he added.
Insolvency statistics, released earlier this month by the Australian Securities & Investments Commission (ASIC), show that 2,656 Australian companies entered external administration in the June quarter 2011, which is the highest number since December 2008’s record of 2,671.
According to the latest Bibby Barometer index, 21% of SMEs would likely become insolvent and 43% would have to downsize if they lost their two major customers or if their two largest suppliers converted them to cash-on-delivery status, with just 27% believing that they could take the tightening of the cash flow.
The index also finds that payment delays have gotten worse in the last 12 months, with 47% of small businesses reporting that they have experienced overdue customer payments.
The report also shows that 24% of Australian SMEs reported having experienced bad debt in the last year, with 79% stating that a bad debt of only 5% of annual turnover would have a profound impact on their profitability.
In order to alleviate cash flow problems, 46% of decision makers have accessed their personal savings and 38% took an overdraft.
Australian small business owners have also said what are main challenges their companies are likely to face in the months ahead. 30% stated rising interest rates and reduced consumer spending, 29% increased staff wages and 28% increasing fuel costs.
The three major obstacles for business expansion are cash flow (22%), staffing (19%) and sales capacity (17%).
Still there is hope
Despite the grim outlook, Australian small business owners remain optimistic. According to the survey, 50% of the respondents have reported that their businesses are growing, 29% are faring just as well as last year and that 21% are contracting.
Almost two thirds of the small businesses owners expect a sales growth over the coming 12 months, while only 10% expect a decline.