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42% of Australian SMEs believe recession will be avoided in 2009/10

Australian SMEs (Small and Medium Enterprises) may be weathering the current Global Financial Crisis better than some media reports suggest, says legal and accounting group MSI Global Alliance who recently surveyed 976 Australian SMEs (companies with up to 200 employees). MSI Global Alliance, of which Aitken Partners is a member, undertook the poll to ascertain current views of SME owners and managers on how their businesses have fared over the past 12 months.

Looking confidently to the future, 42% of survey participants said that ‘the recession will be avoided’ while 8% forecast ‘a significant upswing’ in the economy. However, 32% of participants felt the a recession would ‘take hold’ in FY09/10.

Annual turnover

When comparing annual turnover for the year to 30 June 2009 to the prior year, the following results were recorded with:

  • 39% of participants said turnover was up in 2009
  • 31% of participants said there had been no change
  • 30% of participants said turnover had fallen in 2009

Total staff numbers

SME owners and managers registered mixed signals on full-time equivalent staff numbers. Perhaps surprisingly,  16% of survey participants increased their full time equivalent staff numbers. While 61% of employers said there had been no change in total employment numbers, 23% had reduced the size of their teams. Despite the official unemployment rate rising to 5.8% in June, the MSI poll indicated that 13% of those surveyed said they had actually found itmore difficult to recruit staff in the past year – against just 30% who said it had become easier.

Salary levels

In addition, and also despite a deteriorating economic situation throughout the financial year, 35% of SMEs said that salary levels for new employees had increased.

Government incentives

In May’s Budget the Federal Government announced a tax break for businesses purchasing new equipment prior to 30 June 2009. The MSI survey showed that even with government handouts, only a small proportion of businesses (30%) took advantage of the tax break. Now, with a new financial year underway, the survey showed businesses would like to see the government introduce a range of additional measures to take advantage of including;

A progressive tax scale for company tax based on size of profit

Continue the tax break for 3-6 months

Eliminate payroll tax and consolidate taxes and government structures across states

Introduce employment incentives and widen training incentives to allow eligibility even for degree-qualified people to be retrained

Business focus for FY09/10

Looking at the 2009/10 financial year, participants who spoke to MSI said the major focus of their business would be:

  • a focus on profitability (37%)
  • a focus on growing revenue (37%)
  • a focus on retaining their best people (13%)

Melbourne based MSI Global Alliance spokesman Charles Hornor commented that “This survey highlights the speed at which attitudes can change. Only a few months ago it was all doom and gloom and yet now, 42% of SMEs believe a recession will be avoided. Time will tell. However, a sense of confidence came across in this survey that very definitely wasn’t there when we surveyed the same group just three months ago.”

“Add to this the revenue growth that has been achieved by almost 40% of participants in the past year and a fascinating picture starts to emerge. We’re not for a moment saying it’s going to be plain sailing in the economy from this point on, not did the survey results. What does seem to be taking shape though, in the minds of SME owners and managers, is that fact that we’re not going to hit rock-bottom in the way they have in North America and Europe.”