But all is not gloom and doom, with some signs of business confidence returning and technology predicted to play an important part in driving future growth as business climbs out of the current economic rut.
According to the second bi-annual Servcorp Australian Business Growth Monitor published today, more than half of Australian companies surveyed have experienced no revenue growth during the last 12 months – up from 51% last July.
Marcus Moufarrige, CEO of the Servicop serviced and virtual offices company, while acknowledging that talk of tough economic conditions is nothing new, says this latest report is a “harsh reality check for all Australian businesses.”
Despite the gloomy report, Servcorp says that, promisingly, the majority of Australian businesses are feeling confident about the future. It reports that of the companies that experienced revenue growth over the past year, and an “encouraging” 84% predict further growth in the future, while those who saw revenue decline also remain upbeat – with half predicting a turnaround.
And, technology is to the fore in any potential turnaround in the fortunes of Australian businesses.
Looking at how companies are planning to drive growth, Servcorp says that technology was a key focus with 64% of those questioned planning to invest in technology over the next 12 months – including an upgraded website (33%), social media (26%) and cloud services (16%).
“It’s a great sign that companies recognise the benefits of technology and are making this investment. In tough times, technology has a vital role to play not only in increasing efficiency but also innovation.”
“When you combined this stronger sense of optimism with the green shoots shown by some of Australia’s industries, I hope we’re seeing the early signs of an economy ready to take it up a gear and drive stronger growth.”
Moufarrige said that Servcorp’s growth index score showed an increase of only one point from 98 to 99 since the last report, and that findings from today’s study highlighted the “continued struggle facing local businesses in what appears to be a static Australian economy.”
As well as economic and market conditions being a major barrier to growth, Servcorp says that a reduction in consumer spending and customer budgets has also contributed. Servcorp found that 33% of respondents said the drop in consumer spending was a major barrier, while 36% attributed it to the difficult economic and market conditions.
Moufarrige says that due to the competitive nature of the current market, businesses are also hesitant to hire new staff, with the majority (67%) of companies surveyed maintaining their headcount over the past year. Businesses are also working harder to win new clients who have smaller budgets, with Servcorp finding that a 49% growth in client base is not translating into comparative revenue growth.
Looking ahead, Servcorp says that more than half (54%) of those companies surveyed believe that manufacturing – an industry traditionally seen as a cornerstone of Australia’s economic foundation – is now on the decline, followed by mining (34%) and agriculture (30%).
In contrast, the Index shows that the industries most expected to grow this year include healthcare (40%), professional services (36%) and construction (32%).
“While it doesn’t look good for traditional Aussie industry, it’s promising to see there are still sectors such as professional services and healthcare that are in a strong position for growth,” Moufarrige says.
“Now is the time that companies in these areas need to be bullish and look at how they can grow their business – whether that’s through expanding with new offices at home or abroad, investing in new technology or hiring great talent.”
Servcorp report that there is a “marked decline” in satisfaction levels with the Abbott Government compared to sentiment prior to the Federal Election – almost half (45%) of those surveyed in July 2013 believed they would be better off under a Coalition government, compared to only a quarter (23%) in today’s report who think that the Abbott Government’s commitment to small business has lived up to expectations since it came to office.
“It is not unexpected for new governments to take a while to find their feet as they navigate their way through the first few months in office,” Moufarrige said.
“That said, the new government cannot afford to take its eye off the ball when it comes to stimulating and supporting Australian business growth. It needs to make good on the promises it made – specifically to the small business community who are the lifeblood of our economy – if we’re going to get Australian businesses moving again.”