Micro businesses feeling the pain, says MYOB
The business outlook is brighter for SMEs in 2013, according to the latest MYOB research findings, but micro businesses will continue to do it tough and have been urged to plan ahead.
MYOB has examined research findings from its MYOB Business Monitor studies, conducted between October 2010 and July 2012 to construct a retrospective review of the SME sector.
The series of studies comprised five surveys of a nationally representative sample of more than 1,000 small and medium business owners and managers each time.
According to MYOB, more SMEs experienced a decline in revenue in the 2011/12 financial year than in any other year in the review period.
More than 40% of SMEs saw revenue fall in the July 2012 report, compared to 34% in October 2010.
However, 29% of respondents in the July 2012 report are expecting a revenue rise in the next 12 months. A total of 43% saw it being stable, 22% expected it to fall and 7% were unsure.
According to MYOB chief executive Tim Reed, there is a sense of determination and optimism prevalent throughout the SME sector.
But generally speaking, the results show it’s a “pretty tough environment out there” for business owners, Reed says.
“If we look at what’s happened over the past two years, trading conditions have become tougher and tougher,” he says.
“Within that, micro businesses are finding it the toughest of all. Small businesses less so and medium businesses are faring better again.
“Micro businesses are feeling the pain. I think we see that in most economic downturns because in many sectors they are services that people feel are somewhat discretionary.
“They might be independent contractors or services that are easy to wind back or compress.”
However, Reed says young business owners are typically more optimistic – and are experiencing more growth – than older business owners, partly because they are more tech-savvy.
“Younger business owners are more inclined to be in that start-up stage than older business owners,” he says.
“Businesses adopting new technologies – building websites, using social media, cloud computing, etc. – are performing much better than businesses not using those tools.”
Reed says micro businesses can prepare for 2013 by ensuring they secure all of their existing relationships. This includes finding out how their clients are performing.
“This will give you a realistic view of what your business is looking at in 2013. From there, one can make an assessment of what needs to be done to build a pipeline of new clients,” he says.
Not surprisingly, Reed expects more businesses will use social media more often – and more cleverly – in 2013.
“I do think businesses are using all the social media platforms – particularly LinkedIn for B2B and Facebook for B2C – more than they have in the past,” he says.
“That trend is only going to continue, and can be a really effective way of reaching new clients.
“It’s worth undergoing some training to be able to use those tools confidently because there are etiquettes involved and it’s important to the communities that use those platforms that those etiquettes are followed.”