Mining SMEs are more positive about revenue growth, and growth percentage, than all other sectors – just over 56 per cent are expecting revenue increases over the coming six months, at an average of 5.8 per cent growth according to the latest Scottish Pacific SME Growth Index.
More businesses are in growth mode than at any time since March 2016. Scottish Pacific senior executive Wayne Smith said one in two (51 per cent) are forecasting positive revenue growth for the next six months.
“The average projected revenue increase of 4.5 per ccent is the most positive sentiment since 2016 and reflects a promising rebound in underlying business confidence within the SME sector,” Mr Smith said.
In the mining sector, fewer than one-fifth think revenue will decline, by an average 4.2 per cent.
“When asked how much additional revenue could have been generated if they had better cash flow, only 4.3 per cent of mining sector SMEs (the lowest of any sector) reported that cash flow could not have been better. The average across all sectors was 8 per cent,” he said.
However, mining SMEs are more likely than any other sector to be worried about the potential for sudden disruption of their business model, and about meeting government compliance.
“They are putting in longer hours than all other sectors – almost half work 60-80 hour weeks, with one in five clocking above 80 hours. Fewer than one in 20 work a 40-50 hour week.”
There is also a growing prosperity gap among SMEs – while more are forecasting positive growth, those performing poorly are in significantly worse shape than they were four years ago.
Cash flow tops the SME worry list
Cash flow is an increasing problem for the whole SME sector, and business owners are really putting in the hard yards.
“Many business owners are cash-strapped, time-poor and confused about the options available to them to fund their growth,” Mr Smith said.
“With a declining property market and banks exercising caution, the concern is that a lack of credit could hamper growth prospects. Business owners will need to consider funding alternatives to traditional property secured lending.
“Those SMEs who find alternative ways to fund growth and master cash flow management will have a clear advantage over their competitors,” he said.
Continuing the trend of SMEs looking beyond banks to fund growth, 96 per cent could name a key reason to borrow from an alternative lender, with fast credit approval and reduced compliance the main drawcards.
Almost one in 10 business owners (8%) say revelations from the Banking Royal Commission will prompt them to seek out non-bank alternatives.
The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, said the Index identifies the issues most raised with ASBFEO by SMEs across the country.
“Extended payment times impact business cash flow, which is critical to SME day-to-day operation. Reduced cash flow impacts the ability to pay staff, superannuation and the quarterly BAS, and an overly complex workplace relations system inhibits employment, which in turn inhibits growth,” Ms Carnell said.