As 2020 draws to a close, Australian SMEs are enjoying the benefits of fewer restrictions and improved trading conditions. To get an insight into how our SME’s are feeling about the year ahead, and their overall take on 2020, BizCover surveyed 1,500 SME’s sharing their thoughts and views.
This was a year like no other, one which saw SMEs struggle through bushfires, lockdown and the resulting economic downturn. It comes as no surprise that around 36% of SMEs felt that their performance this year will be worse than last year. When surveyed in 2019 SME’s were much more optimistic with only 10% of expecting their performance to be worse than 2018.
This decline in performance is overwhelmingly due to COVID with 92% attributing the pandemic for this decrease in their business’ performances and 4% of these SMEs had the struggle of coping with the impact of both the bushfires and COVID-19 on their business.
One of the other key factors driving poor performance was the continuing increase in the cost of supplies, an issue that was evident even before COVID, impacting 7% of these SMEs.
In 2019, 58% of SMEs were expecting their performance to be much better or better than the prior year, this year only 35% share that optimism.
| How will your business perform this year compared to last year? | |
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How did the COVID shutdowns impact business?
As the lockdown kicked in, 42% of businesses saw reduced work and/or less customers and 21% having to shut down their business during the first lockdown period. A further 8% were forced to shut down again due to the Victorian lockdown.
True to the resilient Australian spirit, 13% of SMEs kept trading, but started offering different products and services. One of BizCover’s new customers had previously been in the business of customising displays for events and shopping centres but when they lost a lot of work at the beginning of the pandemic, they switched to making labels for sanitiser bottles.
Staff in 3% of SME businesses were forced to take a pay cut, a further 2% were stood down and sadly 1% of SMEs have now permanently shut their businesses.
On a positive note 16% of businesses saw improved trading conditions. Those that benefitted from improved trading tended to be Professionals (68%), with 21% of them working in health services, 14% in consultancy occupations, 13% in accounting and a further 13% in services.
Seeking Assistance
Numerous economic assistance packages were available for SMEs to access and take advantage of during 2020. With 50% of SMEs applying for JobKeeper,12% accessing state government grants and 3% being able to defer their business loans.
Coming out of the pandemic, most businesses (74%) feel they will be able to stand on their own two feet and will not need extra finance to help them recover – those that do will aim to get help from family/friends (8%), rely on credit cards (6%) or get a bank loan (5%).
State v State
When asked how their state was fairing compared to other states, the states impacted the severest by COVID are the most negative, with 87% of Victorians feeling that their state is doing worse or much worse. This is in comparison to Western Australia, where their SMEs are extremely positive about their state’s performance, with 95% of them feeling they were in a much better or better position than other states.
Looking Forward
Working towards the future, there are mixed feelings about Australia’s prospects of recovery over the next 6 months, sentiment was split with 35% being very optimistic/optimistic, 33% neutral with the remainder feeling more pessimistic.
SMEs feel poor trading conditions (21%) and the threat of more shutdowns (27%) will be some of the challenges heading into 2021. Interestingly, only 16% view the loss of job keeper as a challenge. Other smaller issues that SMEs see as restrictions to their performance include more competition, their inability to change their business and adapt as well as a lack of a good online presence.
Notes:
Survey based on 1,501 responses. Customers surveyed November 2020.
BizCover™ Pty Ltd (ABN 68 127 707 975; AFSL 501769).
