RSM Bird Cameron’s thinkBIG 2012 survey results show that 77 per cent of small to medium-sized enterprises (SMEs) expect to grow in the next 12 months, an increase from 69 per cent in 2010 and 76 per cent in 2011.
This is despite the fact that 10 per cent less than in 2011 experienced business growth over the last two years (63.5 per cent versus 73 per cent).
thinkBIG 2012 is RSM Bird Cameron’s sixth study in the series. thinkBIG benchmarks the planning practices of SME owners and assesses the impact of recent global financial conditions on businesses.
This year’s results provide insights into how Australian SMEs feel about their business.
Impact of the global financial crisis three years on
SME owners overall believe their business is successful, however optimism about their company’s medium-term prospects has dropped as extended difficult economic conditions continue taking their toll.
Most SMEs now undertake formal business planning
thinkBIG 2012 revealed that 76 per cent of SME owners now undertake formal planning, which is a massive jump of 30 per cent compared with 2011. This suggests a clear shift in SME owners’ focus on business planning.
Andrew Graham, national head of business solutions RSM Bird Cameron, said, “The fact that the number of owners now doing a formal business plan has almost doubled shows that they understand its importance. RSM Bird Cameron’s experience also shows that businesses who plan are the most successful ones. It is great to see business owners investing in this important process.”
Business sentiment low
thinkBIG 2012 shows that while SME owners believe their business is successful, how they feel about running their business has dropped significantly, recording the lowest rating since the study began in 2007.
Graham said, “It is important to consider the increasing uncertainty SME owners face regarding their medium term prospects. This uncertainty, combined with the extended economic difficulties that many owners have been operating through since the global financial crisis some three years ago has had a negative impact on the way many SME owners feel about running their business.”
Business financing remains a struggle
thinkBIG 2012 reveals that SME owners don’t expect to see an improvement in the availability of finance in the next 12 months and believe financing will remain tight.
Business owners say they will still employ strategies that involve investing in the business, including increasing efficiency through technology and injecting capital into their business.
Graham concurs, “It remains incredibly difficult for SMEs to obtain funding for their business. This is something that owners need to take into consideration and plan for.”
Looking for growth
51 per cent of SME owners continue to rely on reinvested profits as their primary source of funding for growth, consistent with 2011. Significantly less SMEs are foregoing their salary, which is a positive change.
Graham said, “Seeing more SME owners relying on reinvested profits rather than their own salary to fund business growth is a very positive evolution. It shows that they are able to fund business growth through the success of their business and use their salary to improve standard of living, rather than putting everything back into the business.”
Getting the right advice
thinkBIG 2012 reveals that the commonly used external advisors are accountants, consistent with 2011, with 39 per cent of respondents reporting they have used or will use an accountant for business planning.
Graham said, “Following improved revenue growth over the last two years, SME owners appear more willing to focus on growth and are using external expertise to plan their future.”
26 per cent of SME owners report they have used or will use a financial planner for superannuation planning and 20 per cent say they will use a financial planner for retirement planning.
Graham continued, “Considering how complicated it can be to run your own business, ensuring everything is in order with regards to tax, superannuation and so on, it remains important for these business owners to get advice from specialists. This will also help maintain and grow their business.”
RSM Bird Cameron is the largest mid-tier accounting firm in Australia with national ownership and profit sharing and offers a full range of specialist advisory services, including business consulting and advisory, assurance and advisory, taxation consulting, corporate consulting and turnaround and insolvency. RSM Bird Cameron is a core member firm of RSM International, the sixth largest network of independent accounting and consulting firms in the world.