Half of small and medium enterprise (SME) owners expect a higher revenue by the end of 2021, according to ScotPac’s latest SME Growth Index.
Out of 1,255 businesses, 727 are looking to invest back into the business – a jump from the recorded 51.9% in late 2020.
“This brings investment intention almost back to pre-pandemic levels,” said Jon Sutton, chief executive officer of ScotPac. “Findings indicate that if we can get past lockdowns and border restrictions, a slim majority of the SME sector is backing its ability to achieve revenue growth.”
Despite high hopes, Sutton said the SME Growth Index recorded that 26.1% of SMEs expect overall revenue to decline – the highest ever proportion with the widest ever revenue range from +9.6% growth to -15% decline.
“We also recorded the equal lowest ever proportion of SMEs reporting no change in revenue, suggesting businesses are being forced off the fence and either scaling up for growth or bracing for troubled trading conditions,” Sutton said.
Most of these SMEs have identified themselves as either in the growth, stable, or start-up phase. However, an alarming 15.7% of businesses are experiencing a sharp decline. The percentage has almost doubled since the index began in 2014.
It must be noted that this research took place six weeks before and in the early days of the Delta variant outbreak.
Many states such as Queensland, Western Australia, South Australia, and the Northern Territory are among the most positive about finishing the year with strong revenue. Regardless, they should still “be mindful” given Victoria’s current situation.
When a representative sample of the same group was polled this month, it revealed that SMEs in Victoria still feel the impact of the 2020 lockdowns. Six out of 10 Victorian businesses are either forecasting revenue decline or to remain static in the coming months.
“Given the optimistic growth prospects of half the sector, combined with the warning signs for the troubled end of the SME sector, the next 12 months are likely to see strong restructuring and mergers and acquisitions activity,” Sutton said. “This is yet another reason for small business owners to ensure they are getting professional advice to guide their enterprises and the right funding to fuel their business activities and allow them to survive and thrive.”
