More than half of all SME owners have plans to invest in their business in the next six to 12 months, with smaller businesses more inclined to do so, according to a survey.
New research from small-to-medium enterprise (SME) fintech lender Prospa has revealed that 54 per cent of SME owners and managers have plans to invest in their business in the next six to 12 months.
However, more than a third (35 per cent) have no plans to invest in the next six to 12 months, while 12 per cent are unsure.
Common areas of investment that SMEs would be interested in include new products and services (42 per cent), marketing and new sales channels (29 per cent), and renovations and upgrades (25 per cent), the survey of 260 small businesses in Australia with one to 50 employees revealed.
Additionally, other investments that SMEs intend to make in the next six to 12 months include new stock to support increased demand (24 per cent), digital software to support remote working and improve efficiency (24 per cent), as well as new or more skilled employees (17 per cent), the research showed.
Meanwhile, one in four (26 per cent) SMEs has also planned to hire new staff despite the federal government’s JobKeeper scheme drawing to a close in March, according to Prospa.
Younger businesses keen to invest
The survey showed that newer businesses are more eager to invest in their business than their established counterparts.
The figures revealed that 66 per cent of small businesses that have been running for five years or less plan to invest in their business over this period, compared with 42 per cent of those running for more than 10 years.
In addition, SME owners and managers from companies with two to four employees are more likely (66 per cent) than those who are sole traders (45 per cent) to have plans to invest in their business in the next six to 12 months, the survey revealed.
Furthermore, SME owners and managers from companies with an annual turnover of between $100,000 and $499,999 are more likely to have plans to invest in their business (68 per cent) in the next six to 12 months than those with less than $100,000 in annual turnover (45 per cent).
The survey also revealed that 46 per cent of the respondents described their business as being more resilient and sustainable today than before the onset of the coronavirus pandemic.
However, sole traders have potentially felt the negative impacts of COVID-19 more than slightly larger-sized businesses (five to 19 employees), with 63 per cent of respondents with five to 19 employees agreeing that their business is more resilient and sustainable today than before COVID-19, compared with 41 per cent of sole traders, Prospa said.
Of those respondents that felt more connected to their customers and community since COVID-19, 72 per cent said that their business is more resilient and sustainable today than before the onset of COVID-19 crisis.
Of those who did not feel that connections had strengthened during this time, only 22 per cent said that their business is more resilient and sustainable today, according to Prospa.
SMEs sought advice from each other during COVID-19
Meanwhile, 37 per cent of businesses said that they had either sought or provided support, advice or best practice tips on managing the impacts of COVID-19 from, or to other, small businesses in their community.
One of the most common types of support included advice on government support and stimulus packages (35 per cent), the survey found.
Commenting on the survey findings, Prospa CEO Greg Moshal said: “It’s great to see the majority of small businesses have real plans to invest in the next six to 12 months, and we’re definitely seeing this pent-up demand and surging confidence in our own data at Prospa.
“Especially in the lead-up to the end of financial year (EOFY), savvy small businesses are capitalising on measures like the instant asset write-off to make those bigger growth investments they may have put off last year. Now is a good time to be looking at cash flow, chasing down late payments, and planning out where they want the business to be in FY22.”
[Related: Prospa April originations leap 1,331% pcp]
Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.
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