Easter break is no holiday for SMEs
OnDeck study finds upcoming events will have a negative effect on small businesses.
While many Australian workers are looking forward to an extended break this Easter, the same cannot be said for Australia's small businesses, according to research commissioned by online SME lender OnDeck. SMEs are instead bracing for the potential disruption caused by the proximity of Easter, Anzac Day and the upcoming federal election.
According to the research, 59% of surveyed SMEs claim major political events, such as elections, have impacted their business in the past, and 27% believe the Easter and Anzac Day break will have a negative impact on their business. With employees able to get a 10-day break using just 3 days of annual leave, 52% of SMEs believe they will have to juggle staff leave over the Easter and Anzac Day period, and 31% are concerned about potential staff shortages.
As if that weren't enough, the looming federal election also looks likely to present problems for Australian small businesses. Almost half (47%) of SMEs report that they have experienced a slowdown of normal business operations due to past political events, and 30% have seen a drop in revenue.
Cameron Poolman, CEO of OnDeck Australia, says the uncertainty of election results means businesses naturally slow down. "The possibility of a change in Federal government often sees consumers and businesses put major purchases or projects on hold – at least until the polls have delivered a clear result. While that's understandable, the SME sector bears the brunt of this 'wait-and-see' approach," he said.
When it comes to being prepared for political events, only 17% of SMEs believe they were completely prepared, and 59% agree that improved cash flow will help them better deal with major events. For businesses with annual turnover above $200,000, this figure rises to 69%.
In terms of seeking additional cash flow, 57% of business owners would try a bank, 46% would think about using their personal savings and 44% would consider using an online lender. Noah Breslow, global CEO of OnDeck, says that the process of applying for bank finance could also have a negative effect on businesses.
"SMEs face a high rejection rate from mainstream banks: 23% have been knocked back for bank funding in the past," he said. "Among those that have sought finance, 29% say the protracted application and approval process has negatively impacted their activities – so it's not a seamless solution. Moreover, 65% of SMEs were negatively impacted by being turned down by a bank for finance.
"Online lenders offer a quick and easy application process, and we are not just a positive option for SMEs rejected by their bank. Online lenders such as OnDeck also offer the advantage of speed and convenience for those businesses that would be eligible for bank lending, and this can be a critical advantage in preparing for events that are likely to have a short-term impact."