SMEs in decline, says report

Small and medium sized businesses are anticipating a tougher future, according to a national report.

The Bibby Barometer Small Business Survey, recently released by Bibby Financial Services, found small and medium enterprises (SMEs) are increasingly concerned about the current business climate.

The report highlighted depressed sales estimates, difficulties with securing loans and cash flow troubles.

Managing Director, Greg Charlwood, said the survey revealed business expectations for positive sales growth have declined.

In July 2011, 64 per cent of surveyed businesses expected sales growth. By February, this had fallen to 55 per cent.

Several small businesses from Glebe, The Rocks, Redfern and Surry Hills said business was in decline.

The manager at a body art store in Newtown said he had been considering starting his own business but decided against it because he noticed a decline in consumer spending over the last three years.

“A couple of years ago it was a completely different thing.

Now people are more concerned about where they are spending their money,” he said.

He has worked in Newtown for 10 years and has been a manager for five.

He blamed taxation concerns, property prices, and media-constructed fear.

CEO of the SME Association of Australia, Dr Caroline Hong, said the Australian market is too small, and more support and education is needed to help business access the Asian market.

“Those that are thriving and reporting growth are the ones that have seized this opportunity in expanding into the Asian markets.”

According to the SME Association of Australia, SMEs are businesses with one to 199 employees.

They make up 99.7 per cent of Australia’s total businesses.

The report, which examines the perceptions of over 200 small and medium non-retail enterprises, also claimed a majority of small businesses felt banks required too much security for loans.

The owner of Glebe restaurant Pastabella, Santo Fichera, said banks have tightened their lending over the last 12 months.

He has been in the food industry for around 15 years.

“If you want to upgrade your shop, forget it! Unless you have a big cash flow, the banks won’t even look at you,” he said.

“I’m not doing too bad. But instead of being where I want to be in two years, it will take me three and a half years. It’s slowing things down.”

The report also said many small businesses face cash flow problems, with around half experiencing delays in payment.

More than a third (36 per cent) expect an increase in the length of time for payments.

Chair of the Surry Hills Business Alliance, Brian Adams, said many contractors and suppliers ask for their money in advance.

“Those who owe money are slow to pay, many default. As a commercial landlord, I have experienced several tenants closing up, defaulting on their lease.”

Dr Hong was happy with recent NSW government initiatives including the appointment of its first Small Business Commissioner last year and the ‘One on, Two Off’ policy aimed at reducing red tape.