Challenging business conditions as weak revenues continue for 57% of SMEs

Updates to this research will be published monthly to track the impact and response to COVID-19. View previous wave.

The latest wave of the COVID-19 SME Research Tracker shows that despite signs of recovery in the economy, it is very concerning that 57% of SMEs are still reporting lower revenues than pre-COVID, with the average SME turnover down 22%. With ongoing lockdowns and border restrictions, most SMEs also reported a weak holiday trading period compared to 2019.

Table 1: Decline in Revenue Due to COVID-19

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The reduction in JobKeeper payments in January appears to have had an impact, with 33% of SMEs now reporting a decline in employee numbers due to the pandemic, compared to 26% in December.

Table 2: Change in Staff Numbers (Before the Crisis vs Now)

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One-fifth of SMEs continue to receive JobKeeper payments and there is no certainty for employees when these payments end, with 71% of decision-makers unable to guarantee job security for their staff. Accordingly, we should expect a spike in job losses when JobKeeper ends in March.

While working from home remains a popular option for Australian SMEs, the proportion of employees working remotely has fallen to 25% in February, from 33% in October 2020. No doubt this will provide a boost for retailers and hospitality operators that rely on foot traffic in central business districts.

Table 3: Proportion of Staff Working at Home

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Although 15% of SMEs predict growth in 2021, the year ahead is likely to be a story of recovery and consolidation for the majority of businesses. While expectations regarding the Australian economy remain positive, SMEs predict a decline in global conditions over the next 3 months and hence are cautious regarding capital investment and wage growth.

Table 4: Recovery Expectations (Next 3 Months)

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In summary, market conditions continue to be challenging for SMEs. Despite some green shoots as restrictions and border closures are lifted, revenue and jobs data remain relatively weak.

Notwithstanding a level of confidence regarding the Australian economy, SMEs are uncertain about their short-term prospects with the impending conclusion of JobKeeper and concerns about global economic conditions.

Accordingly, capital investment and wage growth are predicted to be flat over the next three months as SMEs look for more clarity in relation to the vaccination program, economic conditions, and ongoing Government support.

Please click on this link to access the full report including subgroup analysis by industry sector, size of business and State. Fifth Quadrant and TEG Insights will publish updates of this research to track the impact and response to COVID-19. Hopefully the results will become more positive as we work through this crisis together.

James Organ

Written by James Organ

I have been working in market research for nearly 30 years and remain dedicated to solving problems and creating great insight and content for our many clients.

Topics: Business Priorities strategic planning CX Articles & Insights market research

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