Small and medium enterprises (SMEs) are feeling optimistic about Christmas, with 76 per cent expecting customer demand to be higher or the same as last year, and 43 per cent expecting revenue and profit to be up on last year, according to the Commonwealth Bank’s biannual SME Confidence Report, released today.
The SME Confidence Report measures confidence among Australian businesses with an annual turnover of $500,000 to $10 million and explores the key challenges and opportunities surrounding these businesses in the current economic environment.
When asked about business conditions in general over the next six months, the majority of business owners said they were feeling positive. Some 87 per cent said business conditions would improve or stay the same; a slight decrease on the last SME Confidence Report in April 2014 (89 per cent). However, there is concern about the impact of macro - economic factors, with 47 per cent saying economic conditions in Australia, and 39 per cent saying global economic conditions, were having a negative impact on their overall business confidence.
A bumper Christmas
Some 38 per cent of SMEs expect to see a stronger Christmas compared to other times of the year and many are expecting revenue (43 per cent), profit (43 per cent) and cash-flow (40 per cent) to increase in comparison to Christmas last year. However, the Commonwealth Bank SME Confidence Report also found that 52 per cent of businesses have no insight into their customers’ likely spending patterns.
According to Adam Bennett, Executive General Manager Local Business Banking, Commonwealth Bank, these findings indicate SMEs have high expectations for this Christmas trading period and are generally feeling confident as we head towards 2015. However the important message for SMEs is to be prepared:
“Given the significance of the Christmas trading period,it’s important that businesses ensure they are well prepared to capitalise on increased customer demand. With six weeks until Christmas, there is time to put the right plans and resources in place to meet their customer needs and make the most of a bumper Christmas,” said Mr Bennett.
The biggest day-to-day challenges of running a business highlighted by SMEs were:
In order to prepare for increased demand over Christmas, businesses are adopting a range of strategies, including improving customer service (46 per cent), refining their product offering (44per cent), and investing in marketing and promotions (40 per cent).
Making the most of a quieter Christmas period
However, not all businesses are expecting a busy Christmas; 25 per cent say demand will be down compared to other times of the year.
If business slows down over the festive season, there are a range of measures that can be taken, from offering seasonal deals to encouraging staff to take holiday leave over this period. You should also see this quieter time as a fantastic opportunity to develop a business plan for the year ahead.
“But whetherChristmas is a busy or a slow time,all SMEs will benefit from expert advice and insights into their customers. At CommBank, we offer our business customers free analytics tools and reports that provide invaluable insights on the spending patterns and demographics of their customers. This enables SMEs to better meet customer needs, and maximise their business potential,” concluded Mr Bennett.
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