Concerns about the state of the economy appear to be weighing heavily on some business owners, with the latest Sensis Business Index finding 12% of business owners are considering closing or selling their businesses.
Report author Christina Singh says it the first time exit intentions have been measured in the survey but the figures seem to be higher than long-term averages, which suggest around 7.5% of business owners are looking to exit at any one time.
She says traditionally about 5% of that 7.5% has been made up of owners looking to exit for succession or lifestyle reasons with 2% selling because they can’t make enough money and 0.5% exiting because they are insolvent.
The higher reading in the Business Index suggests that more business owners are concerned that they cannot generate sufficient returns in the current environment.
High levels of business owners considering exiting can be found in the hospitality and retail sectors.
“Obviously those are sectors that have been under considerable stress,” Singh says.
On a geographic basis exit intentions are highest in Tasmania, where business confidence is well below the national average and lowest in the Australian Capital Territory.
The Index shows business confidence remains steady at 44 index points, about eight points below last year.
Perceptions of the state of the economy dived 15% percentage points, while measures of sales and profitability both fell.
Profitability is worst in the small business sector (under $2 million) where it has sat in negative territory for five consecutive quarters.
Overall employment intentions retreated and are in negative territory, suggesting that the skills crisis may not be as bad as many fear at this stage.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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