Bulk of SMEs predicting imminent growth: Prospa

As per the results, roughly 70 per cent of small and medium-sized enterprise (SME) owners felt the health of their small businesses was “good”, while 81 per cent of SMEs said they were anticipating growth over the next 12 months.

Further, almost half (42 per cent) of respondents expressed that they were predicting that their revenue will lift over this same period.

However, this positive foresight was not universal, with Prospa also reporting that almost nine out of every 10 respondents (87 per cent) were expecting some challenges to their businesses over this same 12-month period. 

The most common concerns shared among these SMEs were increased operating costs (40 per cent), rising transportation costs (36 per cent) and unstable revenue (34 per cent). 

Inflation (24 per cent) and supply chain disruptions (23 per cent) were also reported as key issues. 

This anxiety appears to be reflective of how small businesses had, or were intending to, operate, with Prospa’s findings concluding that around 70 per cent of the respondents had either made, or were making, changes to their business. 

The most common response to this was towards consumers, with one-third (34 per cent) of this cohort stating they had lifted the price of their products in order to keep their business operational. 

Speaking of the results, Prospa co-founder and chief revenue officer Beau Bertoli commented that while Australian small-business owners “have not had an easy ride” since the onset of the COVID-19 pandemic, there is room for optimism.  

“Despite ongoing challenges, the majority of small business owners have been working hard to make smart decisions to drive new revenue and become more efficient to propel growth,” Mr Bertoli said. 

However, Mr Bertoli noted that these findings also reflected “a great opportunity for brokers and advisers to expand into commercial lending”. 

As reflected in the survey, 28 per cent of respondents expressed an intention to borrow as a means to fund their next phase of growth, with the vast majority (71 per cent) stating they will do so in the short term.

“Small businesses are not only confident, but studies show business owners are planning to apply for funds sooner to spare them from paying extra on their repayments,” Mr Bertoli said.  

But while this data suggests that SMEs are willing to borrow, separate findings suggested a challenge for small businesses to secure this capital. 

According to a report released by Banjo Loans earlier this month, roughly 62 per cent of SMEs were then facing challenges in securing funding. 

The same report also suggested that 40 per cent of SMEs were relying on bank loans as funding sources, while roughly half of that share (19 per cent) were relying on family or friends for funding. 

Banjo Loans chief executive Guy Callaghan commented at the time that Australian SMEs were being let down by the traditional banking process. 

“With 40 per cent of SMEs still turning to the major banks as their first funding option, this suggests many are yet to understand there are faster and more efficient funding alternatives that won’t tie up their assets,” Mr Callaghan said.

[Related: Almost two-thirds of SMEs struggling to secure funding: Banjo]