SMEs overcome economic challenges to focus on growth

January 3, 2024

Source-, news, First published on December 21st, 2023

The latest edition of the SME Sentiment Tracker by business market research firm Fifth Quadrant in partnership with Ovation revealed that a significant number of SMEs are shifting their focus towards growth despite ongoing economic challenges, with 38 per cent of SMEs having plans to prioritise growth in the coming 12 months, the highest percentage observed this year.

Concurrently, the proportion of SMEs anticipating a rise in capital expenditure has also reached a peak, with 31 per cent expecting to increase investment in their business, marking a notable high point in investment intentions.

This increased appetite for growth comes despite ongoing concerns regarding wages (70 per cent), the price of fuel (84 per cent) and energy costs (82 per cent), as well as the possibility of future interest rate rises (85 per cent).

Short-term revenue forecasts among businesses have also been found to be consistent. For the third month in a row, the research found that 29 per cent of businesses anticipate a revenue increase in the upcoming four weeks.

The report also highlighted that the stability in revenue expectations may likely have been influenced by heightened marketing efforts, particularly in preparation for the Christmas season, as it is noted that 25 per cent of businesses increased their marketing investments during this period.

On the other hand, satisfaction with the federal Labor government has seen a notable decline, dropping from 33 per cent in October to 25 per cent in November. The report noted that this decline is likely a reaction to the latest interest rate hike and ongoing increases in operating costs.

“In summary, higher growth intentions and steady short-term revenue expectations provide cause for positivity heading into the Christmas period,” Fifth Quadrant, Managing Director, James Organ, said. “The potential for further rate rises in 2024, coupled with higher input costs, are causing much anxiety for SMEs, recession readiness and the ability to pass on higher input costs remain steady. Thus, many SMEs will enter the Christmas period optimistic, and hopeful of easing inflationary and cost pressures in the new year.”

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