Is the recovery here? SME profits increased during 2012, new report reveals

The majority of Australian entrepreneurs saw their net profits increase in the six months to December, reflecting the strength of Australian SMEs despite globally tough economic conditions.

The findings were released today by the Entrepreneurs’ Organisation, showing 67% of Australian SMEs had an increase in revenue in the last half of last year and 54% increased their net profits.

Businesses expect the positive growth to continue with 76% expecting an increase in profits in the next six months.

EO surveyed 415 Australian businesses out of a global membership of 8,000. The organisation represents business with turnover of at least $1 million across a range of industries.

These results are in line with NAB’s recent survey of business confidence which indicated business confidence was at a +3 level on the index, up from -9 in November last year.

EO Sydney board member Michelle Gamble told SmartCompany Australian SMEs were on par with the rest of the world, but there were a couple of key differences.

“Australian members were less confident about their access to capital in the next six months. Globally 29% expected an increase in an access compared with 19% in Australia,” she says.

Gamble says Australian members of EO were also less confident there would be an improvement in economic conditions, but 16% fewer businesses thought their debt loads would increase when compared to the rest of the world.

“Australian members are less confident in an improvement in the economic environment in the next six months. Globally 35% expected improvements compared with 27% in Australia,” she says.

In terms of debt loads, only 10% of Australian SMEs expected an increase versus 26% globally.

Australian members are also more confident about revenue growth in the next six month, with 82% of Australian EO members expecting an increase compared to 78% globally.

The results were overwhelmingly positive, but Gamble says Australia’s location in the Asia-Pacific has delivered a significant benefit.

“We’re wrapped up as part of the south Pacific area, so our chapter includes the Middle East and Asia. Our numbers look great in part because of these areas.

“Australia is certainly doing well, but not quite as well as India and other parts of Asia,” she says.

Overall, she says the results indicated the “positivity and opportunistic nature of Australian entrepreneurs” and reflect a need to consider SMEs as a prime driver of the Australian economy.

“SMEs are the biggest employer of people in the country. They are opportunistic and go after opportunities without being phased by obstacles,” she says.