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South Australian start-ups ahead of the pack

Wednesday, 17 November 2010 | By Michelle Hammond

Start-ups in South Australia are best-placed for success, according to a new survey, with the state notching up the strongest business conditions in Australia.


According to the NAB small business survey, which tracked each state’s progress in the September quarter, business conditions in SA rose by one index point, reaching eight points.


The survey shows SA, along with Western Australia, reported the nation’s strongest cashflow position at 11 points.


Jacqui Colwell, NAB general manager for Victoria, says the results show SA’s small businesses are continuing to outperform their Australian counterparts.


“South Australian SMEs have maintained the highest, or equal highest, business conditions nationally for the past year,” she says.


“The SA economy is characterised by steady growth without the level of peaks and troughs experienced in other states.”


NAB chief economist Alan Oster says the SA economy is reaping the benefits of relatively low levels of population and house prices, coupled with isolation from other states.


“It experiences fewer ups and downs with the finance industry, the manufacturing sector, etc.” Oster says.


“It’s been one of the better performing states for awhile and it’s gone through financial crisis better than most states.”


“Generally what you’re seeing, in all our surveys, is that sectors like retail and wholesale are doing very badly.”


“In the small end, transport is not doing well either. Manufacturing is also not great and the other one that’s only alright is construction.”


Business services, finance and health were the strongest performing SME sectors in the September quarter, with finance and accommodation reporting the strongest cash flow positions.


“Personal services is also doing quite well and that’s been a common theme for a while. It’s the non retail part of consumption – going to restaurants and that sort of stuff,” Oster says.


Colwell says the September quarter results highlight the impact of ongoing global economic uncertainty, speculation around interest rates, and the drawn out 2010 federal election.


“[This] caused some business owners to defer investment plans, focus on reducing debt levels and [curb] discretionary spending,” she says.