Australia’s small business confidence has reached the lowest level of the year with the latest Westpac-Melbourne Institute Small Business Index falling by 10.1 percent to 111.4 in the August report, from 123.9 in May.
On a state level, small businesses in New South Wales and Queensland reported a significant decline of 14.9 and 14.6 percent respectively, while Western Australia bucked the trend with a 6.2 percent lift.
Despite the falls, overall confidence remains in positive territory with key indicators such as stable low interest rates underpinning hopes that recent declines will start to bottom out, said Julie Rynski, Westpac general manager, small business.
Rynski said there are two factors that will lead to increased confidence: the upcoming Christmas period, and sign-off on the federal budget.
“We have still some uncertainty around the budget because it hasn’t yet been ratified.
“After speaking with many of our small business customers, we expect to see sentiment pick up across the nation over the next quarter in the lead up to the busy pre-Christmas period.”
Looking ahead, the Index revealed that small businesses have more moderate expectations about future business activity than in previous quarters, said Rynski.
“A net balance of 16.2 per cent of small businesses (declining from 26.1 per cent in the previous quarter) expects activity to improve over the next three months, and the majority of small business expect to maintain their current level of employment.”
The hospitality and recreational services have proved the most optimistic about business.
“SMEs are the backbone of our economy and Westpac will continue to support this sector by offering easy access to specialised advice, together with the largest business banking footprint in Australia” added Rynski.
TIPS FOR BUSINESS CONFIDENCE
“Small business may be time poor and doing stuff on credit card,” she suggests. “This is not the most cost effective way in the current environment.”
Rynski [pictured] says franchisees need to consider equipment finance and business accounts, and to talk with franchising banking specialists who can look at the business projections and history.
“The next step for growth might be simply employing one more person,” she says.
Westpac has set up a new unit of franchise experts, Connect Now, and this includes the capacity for franchisees to easily access professional advice through video conferencing.