SME growth forecasts hit seven-year highs in wildly fluctuating market

 A remarkable 57% of Australian SMEs expect positive revenue growth over the next six months – a seven year high – while a record 32% are forecasting a contraction in growth.

The wildly contrasting predictions are contained in the latest round (Q3, 2023) of the country’s longest running SME pulse check, the bi-annual SME Growth Index by ScotPac, Australia’s leading non-bank business lender.

For a third straight Index report, the range of SME revenue growth projections stretched to a record margin, from a high of +13% to a low of -22%.

A breakdown of the sentiment by location amplifies the fact that a two-speed SME economy remains at play across the country:

• West Australian and Queensland based SMEs are the nation’s most upbeat, with 92% and 84% respectively predicting positive revenue growth in the next six months.
• Victorian SMEs remains the nation’s most negative with just 17% forecasting positive revenue growth – the only State under 50% – and a concerning 69% warning of income decline.
• Regional SMEs across the country reported a brighter outlook than their metro-based counterparts, with just 17% projecting a contraction in revenue compared with 38% of SMEs in urban centres.

ScotPac CEO, Jon Sutton (pictured), said although it was clear that rising costs were taking a toll on business owners, the resilience of Australian SMEs was again on display in these results.

“Australian SMEs account for 97% of all businesses in this country and employ nearly 8 million people, so the way they feel about their growth prospects has a big say in the health of the national economy,” Mr Sutton said.

“While the full impact of recent award and minimum wage increases is yet to filter through, the fact that average SME growth forecasts remain at near record levels is a great sign of confidence as inflation begins to taper.

“The positivity in our regions is significant, particularly in WA and Queensland, and it highlights the often-overlooked role of SMEs in our natural resources supply chain.

“It is also symbolic of the resurgence in our domestic and international tourism sectors.

“At the other end of the scale, the outlook for Victorian SMEs remains at pandemic-level lows and is nearing the point where policy intervention is required to provide targeted relief and boost opportunities and confidence,” Mr Sutton said.

Mr Sutton encouraged all SME owners to talk regularly with their brokers and advisors to assess their business finance options, regardless of their stage of growth.

“In the current economic climate, it is more important than ever for SMEs to ensure they are getting the right advice so they can access the support they need, when they need it,” Mr Sutton said.

“Over 35 years of operation, ScotPac has helped thousands of businesses at all points of the economic cycle, including when wages and the cost of doing business are on the rise.

“So, whether you need to move quickly to seize an opportunity, or you just want support to better manage your cashflow, ScotPac’s range of funding options can be tailored to provide fast and flexible funding to help every SME,” Sutton said.

National SME growth forecasts