Will aussie smes focus on growth in a 2023 recession?
WILL AUSSIE SMES FOCUS ON GROWTH IN A 2023 RECESSION?
A SMALL BUSINESS LOANS AUSTRALIA STUDY
January 2023
ABOUT THE STUDY
Small Business Loans Australia commissioned a survey of 250 SME business directors and decision makers to discover how recent economic conditions have impacted their ability to focus on business growth, and whether they will look to expand their business in 2023, even with the risk of a recession.
Australian businesses have been weathered a series of challenging years, from the 2019- 20 bushfires to COVID-19 and its associated lockdowns, inflation and a labour shortage. Many economists are forecasting 2023 to offer little relief, predicting economic downturn in the second quarter of the year. Despite this, the last few years have shown the SME sector to be highly resilient, with many businesses continuing to drive growth.
Respondents were asked to specify which years - out of a list of four, including 2019, 2020, 2021 and 2022 _their business focussed on growth by increasing sales, profits, employees, locations and/or markets. Small Business Loans Australia also asked SMEs whether they will focus on growth in 2023, despite predicted economic downturn.
Small Business Loans Australia surveyed 210 owners and senior decision-makers across the full SME spectrum: micro (1-10 employees), small (11-50 employees) and medium-sized (51-200 employees), as well as a small percentage of large businesses (more than 200 employees).
Which years have Australian businesses focused on growth since 2019?
When asked in which years they focussed on business growth, the vast majority of Australian SMEs (78 per cent) facilitated growth at least one of the four years. The year in which the highest percentage of businesses focussed on growth was in 2022 (22 per cent). Surprisingly, more businesses were able to focus on growth in 2020 than in 2019, despite the pandemic in 2020 limiting many business operations and trading. This result indicates that businesses focussed on growth in new areas while they were inhibited from trading in a traditional way (such as through a shopfront). The second year of the pandemic, 2021, was the least popular year for business growth, with only 17 per cent of SMEs using this year to expand.
By State.
Small Business Loans Australia analysed responses across the major states. SMEs from Western Australia focussed on growth the most, with 88 per cent of businesses having focused on growth at some point since 2019, followed closely by 86 per cent of businesses in NSW. Seventy-seven (77) per cent of Queensland businesses, 70 per cent of Victorian businesses and only 63 per cent of South Australian businesses had focussed on growth at any point since 2019.
Having said that, in 2022, South Australian businesses focussed on growth more than those in any other State (26 per cent). This was followed by 25 per cent of Queensland, 24 per cent of West Australian, 22 per cent of Victorian and 19 per cent of NSW businesses.
In which years did your business focus on growth (such as increasing sales, profits, employees, locations and markets)? (By State.)
| Response | |||||
|---|---|---|---|---|---|
| State (%) | |||||
| NSW | VIC | QLD | SA | WA | |
| 2019 | 12 | 22 | 17 | 11 | 36 |
| 2020 | 20 | 20 | 17 | 21 | 28 |
| 2021 | 16 | 22 | 10 | 21 | 16 |
| 2022 | 19 | 22 | 25 | 26 | 24 |
| My business didn't focus on growth in any of these years | 14 | 30 | 23 | 37 | 12 |
By business size.
Small Business Loans Australia analysed responses across business sizes. It found that a higher proportion of larger SMEs (97 per cent of businesses with 51-200 employees and 96 per cent of businesses with 11-50 employees) were able to facilitate growth in recent years. This compares with only 67 per cent of micro businesses (up to 10 employees).
Small businesses were much more likely to focus on growth during the first years of the pandemic, despite this being a tough time for many businesses in Australia. Over a third (34 per cent) of small businesses tried to grow their business in 2020, compared with 22 per cent of medium-sized businesses and 15 per cent of micro businesses. Small businesses were again most likely to focus on growth in 2021, chosen by 22 per cent, compared with 14 per cent of micro businesses and 13 per cent of medium-sized businesses.
In which years did your business focus on growth (such as increasing sales, profits, employees, locations and markets)? (By business size.)
Will Australian businesses focus on growth in 2023?
Small Business Loans Australia also sought to discover whether businesses will focus on growth in 2023, despite the likelihood of a recession. The survey found that almost half (47 per cent) of SMEs will focus on growth this year, regardless of this risk.
In which years did your business focus on growth (such as increasing sales, profits, employees, locations and markets)? (By business size.)
By State.
Across the major States, Queensland and NSW SMEs are most likely to focus on growth this year _52 and 51 per cent respectively. This was followed by 45 per cent of Victorian, 44 per cent of West Australian and 32 per cent of South Australian businesses.
Will your business focus on growth in 2023, despite a potential recession? (By State.)
By business size.
Despite their lower rankings for growth in recent years, micro businesses are the most positive about growth in 2023, chosen by 50 per cent of respondents. This was followed closely by 48 per cent of medium-sized businesses and 37 per cent of small businesses.
Will your business focus on growth in 2023, despite a potential recession? (By business size.)
