The DFA SME survey 2015 is released today. A buoyant SME sector is critical for the future prosperity of Australia not least because one in three Australian households main source of income is derived from employment by small business. In recent years SME’s have been under extreme pressure, with many business owners operating in survival mode.
We have made some changes to our methodology this year. First the definition of a Small and Medium Business Enterprise has been tightened, to include trading businesses, with an Australian Business Number or Australian Company Number, and with a turnover of up to $5m in the past year.
This has excluded a small number of part-time quasi businesses, or micro businesses, and included a small number of larger businesses, which together better reflects the changing nature of the SME landscape. In this edition, we will describe the current mix of businesses in Australia, based on a number of important parameters, then examine their financial services banking footprint, their use of technology, and finally their attitudes and expectations towards their financial services providers.
Much has changed since our last report, not least the rise in the penetration of digital business, the emergence of Fintech start-ups who are beginning to nibble at the feet of incumbents, and a renewed focus by traditional lenders on the SME sector.
Despite this, we find that many SME’s are still finding it difficult to get the services they require to make their businesses thrive; a considerable proportion are expecting more from lenders when it comes to digital business services; and levels of confidence are rotating away from Western Australia towards the Eastern States, as the mining boom passes. Three quarters of business owners are prepared to switch banks, and many banking incumbents do not pass muster then it comes to service or product delivery expectations.
The SME sector must be considered as somewhat volatile, and this goes some way to explaining why some businesses find it hard to get the help they need to grow their business.
In summary firms are not particularly satisfied with the products and services offered by players in the Australian market. Many would in theory be prepared to switch, and yet in practice, do not because either there is no perceived benefit in so doing, or because they are rusted on to long-term relationships.
It is clear that there is a significant opportunity available to players who construct compelling offers to the SME sector, but only if the promise can be delivered in practice. One really important “selling” message is the extent to which banks understand the needs and aspirations of small business owners. This registered more strongly than the general brand association, or reputational elements in the brand drivers.
You can request a free copy of the 39 page report below.
Finally, a word about our survey methodology. We speak with 26,000 business owners each year via a telephone omnibus survey. During a conversation which can last between 10 and 20 minutes we ask about their business condition, expectations, and financial services footprint. The data is subsequently analysed using a range of propriety tools and methods.
The detailed results from the surveys are made available to our paying clients (details on request), but this report provides an overall summary of some of the main findings. Critically, we do not share the results from our 11 segment granular analysis here and so we have used the number of employed staff as a proxy for segmentation in this report. We also make only brief reference to our state by state findings, which are also covered in the full survey. Feel free to contact DFA if you require more information, or something specific. Our surveys can be extended to meet specific client needs.
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