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Small and medium-sized businesses have identified uncertain economic conditions, competition and fears over holding substantial debt as the top three barriers to expansion.
In the second chapter of NAB’s white paper Moments that Matter — Understanding Australian SMEs, which surveyed 808 Australian businesses with a turnover of between $100,000 and $50 million, SMEs stated that while they were generally optimistic about the future, more than a third have put their expansion plans on hold.
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When asked why expansions were delayed, nearly half of the respondents (45 per cent) said that economic uncertainty was discouraging them from doing so.
Further, nearly two-thirds of SMEs (64 per cent) said that they believed economic conditions directly affected their bottom line by reducing sales and revenue, while one in five said that poor economic conditions had led them to consider shutting down shop.
Forty-four per cent of businesses said that they expected the Australian economy to grow over the next three years, while nearly a quarter (24 per cent) predicted it would contract.
Second to economic conditions was a belief that there is “too much competition” in the market (33 per cent), followed by concerns about the businesses “taking on too much debt”.
Access to capital to fund growth was also a barrier, with 28 per cent hesitating because they didn’t believe a bank would give them a loan.
Angela Mentis, chief customer officer of business and private banking at NAB, noted that NAB was therefore providing “simpler contracts and quicker access to credit online” to help SMEs reach their expansion goals; while Steve Kane, general manager for broker distribution, has previously told The Adviser that brokers were well placed to help SMEs fulfil these intentions, too.
Mr Kane said in June: “Brokers, who are often small business owners in their own right, have a shared understanding of the needs of SME customers. They also have access to a broad range of products across the major banks and other lenders. This drives competition across lenders, ensuring that customers are getting the best outcomes.
“Brokers help customers navigate the lenders' criteria, which reduces the amount of time and effort needed from the customer. This allows SMEs to spend more of their valuable time running their business.”
Speaking after the release of the second chapter of the report, Ms Mentis commented: “We [NAB] put the customer front and centre in everything we do — and simplification for our SMEs in particular is a key focus.
“This is where we all need to be — to have the commitment and desire to turn the optimism and confidence we see today in SMEs into lasting activity that will move Australia forward.”
[Related: SMEs prioritising growth and expansion, finds major bank]
