Small to medium business owners expect business growth to increase over the next six months, the Commonwealth Bank’s latest SME Confidence Report has found.

The report, which saw ACA Research survey 405 Australian businesses with an annual turnover of between $500,000 and $25 million, found half, or 50 percent of respondents expect their business’s revenue to increase over the next six months.

Furthermore, 46 percent predict they will see an increase in profit over the same period.

Released in mid-April, the report also found 39 percent of SMEs expect overall business conditions to improve, meanwhile one in 10, or 11 percent predict that business conditions in Australia will worsen.

A total of 49 percent of business owners attribute growth over the next six months to better domestic economic conditions, meanwhile 40 percent saw an increase in business confidence as the driving force and 36 percent believe increased consumer confidence will play a part in business success. 

“These findings indicate SMEs are optimistic the Australian economy will continue to gather momentum, with almost 90 percent of businesses expecting conditions to either improve or remain steady over the next six months,” said Adam Bennett, executive general manager, local business banking at Commonwealth Bank.

“Overall economic conditions look largely positive, with strong employment growth, low interest rates and a healthy housing market supporting improving business confidence and spending patterns,” he added.

According to the findings, business owners expect to drive growth through:

• Cost reduction – 48 percent
• Staff performance – 41 per cent
• Improved customer experience – 31 percent
• Improved financial controls and management – 29 per cent

Businesses recognise key challenges that may prevent growth in 2014 include:

• Meeting client/customer needs – 61 percent
• Cash flow management – 58 percent
• Staff management – 56 percent
• Marketing and sales activities – 55 percent
• Financial management – 50 percent