Nearly half of Australian small businesses plan to reinvest in their business in FY17, with the same number prioritising their investment in machinery, equipment and technology.
Recent research released by Commonwealth Bank surveyed Australian SMBs with an annual turnover of less than $1 million before the end of the financial year, unveiled a positive outlook for next year.
“We typically see a spike in the number of our Business Transaction Accounts opened in June and July, as small businesses gear-up for the new financial year,” Commonwealth Bank executive general manager of small business, Clive van Horen, said.
“The research indicates this trend may continue this year and the overwhelming majority of all Australia’s businesses are small operators so it’s pleasing to know they are looking to reinvest back in their business,” he added.
The research highlighted that cash flow management however, is a major pain point for SMB. One third of businesses reported that they do not use any form of credit facility for business investment, working capital or cash flow.
Additionally, almost one-third of small business owners currently manage cash flow issues by dipping into personal funds.
Findings also showed that retail and hospitality businesses were the most likely to prioritise the evaluation of business technology at the close of FY16, closely followed by those in the professional and business services sector.
However, digitisation, technology and innovation take a back seat, as just one in five small business operators surveyed said they would prioritise a review of their technology, despite the increasing role of technology in business.
Horen added that small businesses understand the difference technology can make to their lives and the customer experience, but find it difficult to sparse the time to research and invest.
“Today’s challenging marketplace calls for innovation, which requires leveraging digital technologies to maintain a competitive advantage,” he said.
The research also found small businesses are not adequately future-proofed. While the majority of small businesses (57 per cent) expect their operations to continue on after they exit the business; two-thirds currently lack a succession plan preparing them to do so.Sole traders are least likely to have a plan (74 per cent), and are also most likely to expect the business to close upon their exit (60 per cent).