Small Business Woes Are Taken Home
0Overall Score

According to a small business ‘stress survey’ commissioned by Microsoft Australia more than a third (38 percent) of Australian small business (SMB) owners and managers report their business is currently struggling or worse, when compared to this time last year. Of those, nine in 10 say the health of their business is having a negative impact on their personal lives.

However, despite this, the survey revealed that nearly 60 percent of small businesses described themselves as healthy, with one in five expecting to continue investing in their people and replacing staff as necessary and only 6% are considering laying off employees.

“It appears that many small businesses have clearly been hit by the reality of the global economic downturn as many of Australia’s small businesses are feeling the pinch and experiencing increased stress in this climate of uncertainty,” said Inese Kingsmill, director of small and mid-market business, Microsoft Australia. 

“However, the survey also found that a larger percentage of businesses are still healthy, which points to the resilience of the sector.  While it’s challenging to look beyond the current economic circumstances, small businesses have an opportunity to look through the uncertainty and start preparing their businesses for the when the economy turns upwards.” 

The March 2009 survey, conducted by Galaxy Research, interviewed owners and managers of SMBs throughout Australia and measured their level of stress relative to the challenges they are facing in today’s business environment.  The research has painted a clear picture of what Australian small businesses are prioritising in today’s economic climate.

 

 

“The three key themes that are coming through loud and clear for managing through the uncertainty are: managing cash flow; reducing costs, and maintaining customers,” said Ms Kingsmill.

The survey also found that more than half (56 percent) of Australian SMBs say that business pressures are more stressful this year than last year, with more than a third (35 percent) reporting that they are working longer hours now when compared to the time they put in prior to the global economic downturn.  For almost half, (42 percent), the primary focus at the moment is simply retaining and growing their customer base.

Microsoft’s top tips for small businesses:

  • Focus on the business’s core strengths, competencies and long term goals.
    Think big picture. Ensure you develop and work to a long-term business plan and that your employees are kept informed of operational decisions.
  • Invest in your people and focus on nurturing the relationships that you have with your employees.
  • Take note of longer term trends, rather than getting sidetracked by short term fluctuations or anomalies.
    Harness the tough times to grow market share – economic downturns may provide opportunities to attract new customers and strengthen existing relationships.
  • Make the most of the IT you’ve already got to improve operational efficiency.
  • Take advantage of State and Federal government and corporate business assistance initiatives, rebates and grants.

Summary of survey findings

  • 29% of Australian SMBs report that their business is struggling, and a further 9% report that their business is suffering.
  • 56% say that business pressures are more stressful this year with one in five (22%) saying that business is much more stressful this year.
  • Almost all business owners/ managers (92%) who said their business was struggling or suffering report that the health of their business is having a negative impact on their personal life and 33% say that it is having a large impact.
  • One third (35%) of SMBs are working longer hours now when compared to hours worked prior to the economic downturn (45% among struggling SMBs).
    Currently, the primary focus among SMBs is customer retention and growth (42%), while for 34% the priority is cost management and this latter area is the primary focus of SMBs that are struggling (43%).
     

The main challenges for SMBs this year are:

Customer retention and growth 54%
Keeping costs down 44%
Managing cash flow 40%
Minimising bad debt 21%

Their focus is less on:

Competition 11%
Topline revenue growth 10%

Healthy companies are more likely to say that they will invest in technology to stay ahead of the competition (24% compared to 10% among struggling SMBs), with 18% of SMBs overall saying this.