SME Owners still optimistic but not retiring any time soon

Perth “Accounting firm RSM Bird Cameron™s fourth thinkBIG benchmark study into Australia™s small-to-medium enterprises (SMEs) found that, for the second year in a row, one in five SME owners have delayed their exit date from their business because of economic uncertainty.

Business owners reported little change in their plans to exit the business from 2009, with more owners expecting to continue working after they dispose of their business compared with three years ago.

According to the study, SME owners are quite optimistic about their business™s medium-term prospects but remain concerned about cashflow management and continue to be more aware of the stress associated with managing their business.

More than half of business owners in the thinkBIG study do not expect to see any improvement in the availability of finance in the short term, underlining continuing uncertainty in the sector.

thinkBIG found that business owners faced tougher trading conditions over the last two years, with nearly a third recording no revenue growth or a decline in revenues, up from the 2009 result, said Terry Rodoni, director, Business Solutions, RSM Bird Cameron

On a brighter note, business owners in regional centres experienced the strongest revenue growth..

SME owners have told us they will increasingly improve efficiency through technology over the next 12 months, although many will continue to rely on price increases or overhead reduction to protect their margins, Terry said.

Business owners more optimistic about next 12 months

The thinkBIG survey revealed there are some modest signs of a more optimistic outlook over the next 12 months, with fewer SME owners expecting to reduce personal drawings and fewer expecting to reduce staff. However, nearly a third of owners are not sure whether their business will grow over the next two years or do not believe it will grow.

The study shows that SME owners tend to be high on enthusiasm but many find it difficult to set aside time for planning. In spite of the difficult trading conditions over the last two years, SME owners remain satisfied with their decision to run their own business.

Planning still not high on the agenda for SMEs

Consistent with thinkBIG 2009 study, more than half of SME owners do not plan their business on a formal basis and the majority has no plans to invest a proportion of their retirement funds into superannuation after leaving the business.

Business owners that make the commitment to undertake formal business planning are more likely to grow their business, Terry said.

thinkBIG found that significantly more businesses that plan their business recorded revenue growth compared with businesses that do not plan, in spite of the difficult trading conditions over the last two years.

Superannuation unsatisfactory

Business owners™ satisfaction level with their retirement provisions has remained low over the last three years, with only one in 14 owners completely satisfied.

SME owners continue to be highly dissatisfied with their superannuation provisions for retirement, which is not surprising given thinkBIG found that only a third of owners expect to invest some proportion of their retirement funds into superannuation after leaving the business.