Most companies are maintaining a positive outlook and plan to invest despite current challenges of continuing supply chain issues and rising costs.
This was according to a new Commonwealth Bank study, which found that nearly one in four businesses are buying more from local Australian companies to overcome supply chain problems, rather than import from overseas.
Mike Vacy-Lyle, CBA’s group executive of business banking, said many businesses were turning to innovation and investment to protect themselves and grow.
“Despite difficult conditions, many businesses are planning to innovate and adapt to increase their revenue, and one in three anticipate growth in profits in the next 12 months,” Vacy-Lyle said.
The CBA exec noted that the greatest disruption to supply chains has been experienced when purchasing passenger vehicles, with around half of businesses reporting delays.
“It would appear businesses are not waiting for supply chain issues to ease, but rather are adapting with new procurement processes and asset management,” Vacy-Lyle said. “Many businesses are also extending the life of current equipment or sourcing cheaper products and brands not normally considered, to overcome supply chain problems.”
The survey of around 800 Australian SMEs across a broad range of industries revealed that production, retail, hospitality, and distribution were the industries hardest hit by supply chain issues. Worst affected by rising costs was the construction industry, with 86% of respondents in that sector expecting increased costs over the coming year. As a result, more than any other sector, businesses in construction had plans to introduce more efficient systems and processes and reduce or restructure their costs and debt.
Reducing or restructuring operating cost and debt, adapting business strategies to increase competitiveness, and investing in new vehicles, equipment or plant were identified as the top three initiatives businesses were investing in to boost business activities this financial year, the study showed.
Vacy-Lyle said demand for finance remained steady, with two in five businesses predicting an increase in finance needs over the next year.
“In an inflationary business environment, it is not surprising that reducing costs is a key focus however, many businesses are adapting strategies to the changing operating landscape and investing in new vehicles, equipment and technologies to strengthen their businesses over the next 12 months,” he said.
