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SME revenue forecasts reveal a widening disparity in how they view future growth prospects, ScotPac research shows.
The difference in revenue growth forecasts between the most positive and negative small and medium-sized enterprises (SME) has stretched to a record high, according to non-bank lender ScotPac.
The divide – the largest in the 11-year history of ScotPac’s biannual SME Growth Index Report – exposed a contrast in SME confidence across state borders and business sectors.
ScotPac research showed the gap between the most positive and negative six-month revenue growth forecasts for SMEs stretched to 48 percentage points.
The most positive businesses flagged 18 per cent revenue growth and the most pessimistic predicted a 30 per cent decline, a record gap between the two.
Nationally, 59 per cent of SMEs expected to see half-year revenue growth, which is nearing the record high of 62.6 per cent achieved in 2014.
However, that was tempered by the one-third of businesses expecting revenue to decline.
ScotPac also found that the average projected revenue growth rate across all SMEs was 1.4 per cent.
Craig Michie, ScotPac Group executive – client acquisition, said that despite the mixed results, it was encouraging that most SMEs were projecting a rise in short-term revenue.
“Considering the cost challenges SMEs faced in 2024 it’s great news that average revenue forecasts remain in the black,” Michie said.
“The surge in optimism from businesses in resource-rich states shows no signs of slowing, while SMEs with tight margins or high exposure to discretionary spending are understandably more cautious about the future.”
He continued: “There are more challenges on the horizon for business owners with the super guarantee set to rise again in July, and the ongoing uncertainty around tariff policies.
“However, with inflation and interest rates expected to ease in coming months, there are good prospects of SME confidence lifting across more states and sectors.”
Gloomy outlook for Victorian SMEs
ScotPac research showed significant regional differences in revenue growth projections by SMEs.
Victoria remained the only state with negative revenue expectations, with SMEs projecting an average 9 per cent decline.
Contrastingly, Queensland SMEs topped the national confidence table with an average revenue growth forecast of 10 per cent; Western Australian SMEs were the next most positive with an average growth forecast of 7 per cent.
By sector, mining-related SMEs were the most optimistic, predicting average revenue growth of 6.3 per cent.
Construction SMEs were the most pessimistic, anticipating revenue to fall by 8.3 per cent.
Recent research from small business lender OnDeck Australia showed that lower interest rates have fuelled stronger confidence among small businesses and led to a jump in business loans.
The share of SMEs experiencing improving cash flows has also increased for the second consecutive quarter, according to Westpac.
In addition, an increasing number of small businesses are looking to take out finance in the next year, according to Lumi, which found strong SME growth targets but that shallow cash reserves were a recurring problem.
[Related: Small business confidence rebounds as interest rates ease]
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