From bushfires, floods, lockdowns, inflation and labour shortage, Australian businesses have faced unprecedented challenges in recent years. In 2022, Australia also recorded the largest quarterly rise to the cost-of-living index since the September 2000 quarter[1], with many economists predicting a recession for Australia in 2023. Despite these obstacles, new research reveals that half (48 per cent) of small-to-medium businesses are looking to expand this year, even while they believe there is a risk of recession.
The findings were derived from an independent survey commissioned by business loan comparison site Small Business Loans Australia. Respondents were 210 business 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 SMEs (more than 200 employees). The full survey results, including breakdowns across business sizes and states, can be found here: https://smallbusinessloansaustralia.com/growth-in-recession/
Small Business Loans Australia asked respondents if they had focussed on growing their businesses in the last four years – three of which were hugely challenging for most businesses – and if they will grow their business this year. Surprisingly, the highest proportion of respondents (48 per cent) are focussing on growing this year. This is more than twice the proportion of respondents (22 per cent) who focussed on growth in 2022.
The smallest proportion of businesses actively growing was in 2020 (just 20 per cent) and 2021 (17 per cent). Also surprising was the small proportion of businesses (18 per cent) who focussed on growth in 2019, before the pandemic.
Small Business Loans Australia analysed responses across the states and territories. Businesses in Western Australia demonstrated the highest growth, with 88 per cent of businesses having focused on growth at some point since 2019, followed closely by 86 per cent of businesses in New South Wales. From 2019-2020 West Australian businesses saw the most significant growth, chosen by 36 per cent of SMEs in 2019 and 28 per cent in 2020. In 2021 Victorian businesses focused on growth more than those in any other state, chosen by 22 per cent whilst South Australian businesses came out on top in 2022, chosen by 26 per cent. Businesses in the ACT were most confident about growth in 2023, with 60 per cent of businesses specifying they will use this year to focus on growth, despite a potential recession.
More than half of businesses in Queensland (52 per cent) and New South Wales (51 per cent) will focus on growth this year. Micro businesses are predicted to be the most positive about growth in 2023, sitting at 50 per cent, compared with 48 per cent of medium sized businesses and 37 per cent of small businesses.
Alon Rajik, Founder and Managing Director of Small Business Loans Australia, says: “It is promising to see that almost half of the country’s SMEs consider 2023 as a period of growth for their business. Our research indicates that regardless of a potential economic slowdown, SMEs will continue to be resilient against hardship and confident in their ability to weather tough economic periods, after they have survived a series of unprecedented global and economic disruptions.
“The challenges of the last three years, while putting a strain on so many businesses, motivated many to change the way they operated and to innovate, which steered many toward online trading and away from traditional shopfront selling.
“With the risks of a recession, however, businesses are best to make smart financial choices when expanding. When seeking financing to facilitate growth, it’s a good idea to shop around to secure low interest rates and fees.”