SMEs upbeat about profit outlook: Survey

Small business conditions have improved and the outlook for profits among SMEs is at its highest since last September, according to the results from the latest NAB SME survey.

The survey, which interviews 650 firms with revenue between $2-$10 million, also found that SMEs are performing better than their large corporate counterparts.

The NAB SME business conditions index increased by two points to -10 during the June quarter, with larger businesses scoring at -12 for the same category.

But the best results were in the outlook for profits, with the profitability outlook index improving by a massive 28 points from -27 to 1, across all sizes of SMEs. However, that number remains below the index for larger businesses, whose index remains at 3 points.

Business confidence also increased by a massive 15 points from -22 to -7, while medium-sized SMEs with annual revenue between $3-$5 million were the best performing sector at -6 index points.

Kevin Potter, Victorian general manager of nabbusiness, says while SMEs have been struggling for awhile, there is a “heightened view of optimism”.

“I think if you look at the national results, it’s a reasonably good picture. Business conditions have improved, what we see is confidence has improved significantly, and the profit outlook has also improved.”

“I think this is a product of a number of things, consumer confidence has had a significant impact, and I think the programs that have been led by both state and federal governments have had an impact.”

Potter says the general consensus is the index will continue to improve, with more positive results to come early next year.

“Which is good news, for businesses, governments and consumers, and we hope the year ahead will have more opportunities for SMEs. Things are looking better.”

SMEs located in South Australia and Western Australia recorded the best conditions, with New South Wales following. Victoria fell from “above average” during the previous quarter to “below average”, with Queensland also behind the national average.

Finance, insurance and retail sectors saw the best improvements in business conditions, along with the property services sector due to the popularity surrounding the First Home Owners Grant.

The survey found that the business outlook for smaller SMEs is healthy in the finance, transport and wholesale industries, while medium size businesses are confident in the property, accommodation and transport sectors. For larger SMEs, property, finance, transport and health are the most promising areas.