New report: SME strengths and weaknesses by industry
The most confident businesses in all industries are doing the same thing.
A quarterly business index that has tracked small- and medium-sized enterprises (SMEs) confidence and behaviour since 1993 has found confidence to be high overall. Sensis Findings for the March 2017 Sensis Business Index, released today, show that it's close to the highest it's been since 2010. Last quarter was the first time since 2011 that the overall outlook was positive and the new report shows that the trend is continuing, despite drops since then.
Despite the diversity of surveyed industries, which include 1,000 metropolitan and regional SMEs across industries including manufacturing, hospitality, health and property – a lot of commonalities emerged. Dropping sales, declining profits, unfavourable government legislation and a generally poor business environment are posing problems across the board, while many of the strongest performers give thanks to the same attributes.
- Manufacturing: The lowest overall confidence by a large margin. An unfavourable business environment was cited as the main concern, as evidenced by falling sales and less confidence in profitability. However, despite all this, the overall outlook remains favourable and is expected to improve next quarter.
- Building and construction: With confidence above the national average, things are looking good for the building and construction industry. Pressure points do remain, with stiff competition being one of the main concerns. Established and solid businesses were correspondingly more confident and expressed very positive outlooks.
- Wholesale trade: Confidence took a hit, with a loss of profitability being one of the chief concerns. The more confident traders held a strong position due to the advantages of specific business strengths as well as having undertaken specific initiatives.
- Retail trade: Other than manufacturing, overall confidence is lowest in the retail trade despite an uptick in the first quarter of 2017. Declining sales are the root of the problem for the pessimistic businesses, but plenty are still expressing confidence in the future. The more established and larger businesses remain more confident, in line with the extra resources they have to adjust to new market conditions, such as the upcoming reality of online orders and home delivery.
- Transport and storage: Confidence in this industry is a rollercoaster, but generally finds itself below the national average. This quarter is no exception, with drops in confidence following "unfavourable government policies". Once again, larger and more established transport and storage businesses remain more confident in their ability to weather these policies.
- Hospitality: Confidence in this industry has dropped below the national average again, despite riding high throughout 2016. Confidence in this sector is more purely dependent on sales than other areas, with the most confident among them maintaining strong sales, and the least confident blaming falling sales. Unfortunately, confidence in both sales and profitability were down across SMEs in the hospitality industry, despite other indicators remaining positive.
Other areas surveyed include finance, insurance, communication, cultural, recreational, property and business services. A similar story emerged from all of them, with high confidence overall – well above the national average – despite slowdowns and drops in 2015 and 2016. Concerned businesses in these sectors nominate falling sales as the main reason, while some of the most confident performers nominate their specific, core business strengths.
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