Nassim Khadem Reporter

Nassim covers the accounting and tax rounds for BRW, as well as general business news. She previously worked for The Age newspaper covering general news, state politics and economics.

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Cash reserve rundown feeds grim small business outlook for 2013

Published 11 December 2012 05:08, Updated 12 December 2012 05:42

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Cash reserve rundown feeds grim small business outlook for 2013

Scarcity of finance put the squeeze on the cash reserves of the majority of Australian small businesses in 2012, the CPA Australia Asia-Pacific Small Business Survey found. Photo: Sheridan Randall

Australian small businesses are the least optimistic within the Asia-Pacific about the 2013 economic outlook, a new survey shows, and 75 per cent of those surveyed say they ran down their cash position in the past year because they had trouble obtaining finance.

Asia Pacific business confidence ranking

Position Market Proportion expecting business growth Respondents
1 Indonesia 94 257
2 Malaysia 87 250
3 Singapore 71 249
4 New Zealand 64 258
5 Australia 60 500
6 Hong Kong 59 250
Source: CPA Australia Asia-Pacific Small Business Survey 2012

The survey of more than 1700 small business operators in Asia-Pacific economies (Australia, Hong Kong, Indonesia, Malaysia, New Zealand and Singapore) found most expect the local economy to shrink in 2013.

The CPA Australia Asia-Pacific Small Business Survey 2012 also found that of the 500 Australian small business operators (those with less than 20 employees) surveyed, 60 per cent have a low expectation of their business growing in the coming year. These figures are higher than small businesses in other Asia-Pacific countries and almost mirror the sentiment recorded at the height of the GFC.

CPA Australia chief executive Alex Malley says the results paint a “worrying” picture and reflects continuing uncertainty about the domestic and global outlook. Tackling national issues such getting the budget back to surplus, productivity, tax reform and regulation are now more important than ever.

“The survey results should act as a further wake up call to key decision makers, of the need to focus on how Australia could be best positioned to thrive in a hyper competitive regional and global environment,” he says.

“A large part of achieving this will be predicated on the existence of a dynamic, innovative small business sector with a focus on the high end knowledge economy.”

The survey also shows that small businesses are finding it hard to get bank funding. While there was a 8 per cent increase in Australian businesses having a loan in 2012 from 2011, many still had to find alternative ways to secure cash.

Of Australian small businesses indicating they experienced difficulty in accessing finance, 34 per cent said it hurt their ability to grow.

In this context, Australian businesses were more likely to alter their business strategy or draw on cash reserves. Notably, 75 per cent of Australian small businesses ran down their cash position because they couldn’t get bank finance.

The survey also found 47 per cent of Australian business operators using personal credit cards to finance business activities over the past year.

The one positive finding was that small businesses seem to be improving their business management practices in response to current economic conditions. “This possibly reflects an acceptance that difficult trading conditions will persist for some time and therefore businesses must work to improve their performance rather than rely on a strong economic recovery,” the report says.

When it comes to employment expectations, more than one in five small businesses are expecting an increase in employee numbers in 2013. This compares favourably to the past year when only 14 per cent of Australian businesses actually increased the number of staff they hired in 2012.

Australian and New Zealand small businesses also remain more likely to need additional finance in 2012 than their Asian counterparts.

In general, across the Asia-Pacific younger businesses and younger respondents seem more positive about economic growth prospects for 2013. Businesses from the finance and insurance, mining, administrative and support services and agriculture, fishing and forestry industries have the most positive outlook on the economy for 2013.

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