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The biannual survey found 51 per cent of small and medium-sized enterprises are not confident of achieving their near-term revenue goals, pointing to a widening gap between business optimism and execution.
Nearly 40 per cent of SMEs identified access to finance as the single largest obstacle to growth, while 28 per cent said cost-of-living pressures were softening customer demand and weighing on confidence.
A further 15 per cent said they were struggling to access grants that could support expansion, while 14 per cent cited time constraints as a factor limiting performance.
Another earlier survey, released by National Australia Bank, found that business confidence was at record lows, despite conditions in some sectors remaining relatively favourable.
ScotPac CEO Jon Sutton said the findings reflected a changing operating environment for Australian businesses.
“SMEs are telling us they see opportunity ahead, but they’re far less certain about their ability to convert that into actual revenue,” he said.
“At the centre of that gap is access to capital. Nearly 40 per cent of SMEs now identify access to finance as the single biggest barrier to success.
“When you add the potential supply chains and cash flow impacts for SMEs arising from the tensions in the Middle East, it is critical for SMEs to be sitting down with their advisers to ensure they have the right funding structure in place.”
Indeed, brokers have noted that many businesses are in need of access to capital, particularly working capital and line of credit solutions.
Prior to the Middle East conflict and subsequent fuel shock, issues such as Australian Tax Office (ATO) debt and changes to Payday Super were, and still are, weighing on SMEs.
Sutton added that geopolitical instability put even more pressure on margins and cash flow.
“The Middle East conflict has already flowed through to higher fuel costs and broader input prices, particularly across petrochemical-linked supply chains,” Sutton said.
“That is placing additional pressure on margins and cash flow and increasing the need for SMEs to have reliable access to working capital.”
He said the combination of weaker demand and rising costs was creating a more difficult funding environment, even for businesses that remain fundamentally sound.
“Businesses may be able to pass on cost increases, but there is often a lag before that revenue is realised,” Sutton said.
“That’s where access to flexible funding solutions becomes a necessity – not only to support growth, but to relieve pressure on day-to-day operations in uncertain economic times by bridging the gap between costs being incurred and income being received.”
Other industry figures, such as Connective’s head of commercial and asset finance, Brent Starrenburg, have noted that while the conditions for businesses remain suboptimal, this presents an opportunity for brokers to strengthen partnerships with SME clients and develop as trusted partners.
Sutton said the survey underscored the need for SMEs to review funding arrangements before conditions deteriorate further.
“Given the scale of global disruption we’re now seeing, SMEs should not wait until cash flow becomes a problem,” Sutton said.
“Now is the time to speak with your finance provider, review your funding structures, and ensure you have the flexibility to respond to changing conditions.”
ScotPac’s round 24 SME Growth Index surveyed 728 Australian SMEs with annual revenues between $1 million and $20 million across a range of sectors, including business services, wholesale, manufacturing, retail, transport, construction, and agriculture.
[Related: Loan demand drops as SMEs turn defensive]
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