SMEs expect revenue to grow 7% in 2009-10

A survey of more than 1000 small and medium business owners has shown that they expect to keep growing despite the downturn, with most targeting revenue growth of 6.8% in 2009-10.

The survey, commissioned by St.George Bank and conducted by Galaxy Research, shows that while SMEs have just come through a very tough year (22% says profit have fallen ‘much lower’ since the downturn began, while 38% say profit is a ‘little lower’) most are tipping a relatively slow recovery.

Two in three (65%) SMEs believe the 2009-10 financial year will be worse than in the 2008-09 financial year (21% are tipping much worse, 45% a little worse), while 37% believe the upturn will kick in by the end of the 2009-10 financial year.

However, the fact that 35% of respondents are tipping revenue growth of between 1-10% indicates that most SMEs are showing resilience through a very tough period.

“Given historical average growth for SMEs is around 10%, this provides a good indication they are still determined to achieve growth despite the economic downturn,” says Greg Kenny, general manager of St.George Corporate & Business Bank.

Cashflow, increasing wages or benefits and sales revenue remain the biggest concerns for SMEs. The survey indentified five key strategies being used by SMEs to get through the downturn. These included:

• 70% focusing on core customers (39% already have been, 31% plan to be)
• 67% focusing on the fundamentals of their business (32% already have been, 35% plan to be)
• 64% cutting costs (35% already have been, 29% plan to be)
• 57% increasing new business development (18% already have been, 38% plan to be)
• 55% increasing product and service offering (20% already have been, 35% plan to be)

And in a positive sign for the wider economy, one in four respondents said they planned to increase staff levels in the current downturn (7% already have done, 18% plan to).

“Australian SMEs employ half of this country’s private sector workforce, so there is no doubt the health of SMEs in Australia is vitally important to our economy. So it’s promising to hear how resilient SMEs are and that they are focused on strengthening their core operations to emerge from the downturn more competitively positioned,” Kenny says.