With the mining downturn weighing on confidence, local small and medium-size businesses are feeling more negative about their economic prospects, according to a new report by Bibby Financial Services.
Bibby’s national survey of 620 business owners found that Western Australian SMEs are the most likely to believe that the economy will contract over the next 12 months.
About 42 per cent of WA businesses believe the economy will contract, compared with a national 29 per cent figure.
The state’s businesses area also the most likely to say that their cash flow is more difficult to manage than 12 months ago, with half of the state’s SMEs saying that cash flow has deteriorated, against 40 per cent nationally.
In WA, 53 per cent of businesses expect a decline in sales over the next year.
Local businesses highlighted rising expenses, achieving a good work-life balance, time management and increased competition as the most common challenges to running a business.
“After a long period of subdued confidence resulting in low investment intentions among SMEs nationally, the interest rate cut earlier this month and last week’s federal budget look set to provide a boost to SMEs and encourage innovation in the small business sector, particularly for startups,” Bibby general managing director Mark Cleaver said.
“Lower interest rates and the budget announcements will provide some relief to WA SMEs who are experiencing a downturn in economic activity due to falling commodity prices and the decline in mining operations.
“With the iron ore price falling to fresh lows, these fears have been compounded, hitting the state on several fronts.”
Combating the economic headwinds, WA businesses are also among the most likely to say they intend to access new customer segments and to embark on product, service or process innovation in the coming year.
