Small business optimism has returned to levels not seen in almost two years according to a new survey.
The survey, conducted by Bibby Financial Services, showed 65 per cent of small businesses are more optimistic about sales growth in the coming 12 months – up from 55 percent in July 2011.
The Bibby Barometer also found that business investment intentions have increased in line with an expected growth in sales.
Twenty-eight percent intend to invest in their business in the coming 12 months compared to 20 percent six months ago. About half (49 percent) intend to maintain their current level of investment while only 8 percent remain pessimistic and expect a decline in sales over the coming year.
The survey, which is conducted bi-annually on over 200 small businesses, found that Australian small business decision makers are still concerned about global economic conditions.
Almost half (47 percent) are more concerned about global economic conditions than they were a year ago, and this is little changed in the past six months (51 percent).
“There is no doubt that small business sentiment is improving, said Gary Green, National Sales Director, Bibby Financial Services. “Low and falling interest rates have had a positive impact on the majority (57 percent) of small businesses and a further rate cut is likely to increase small business confidence.
“However despite the recovery in business optimism, cash flow continues to be a leading constraint. Our Barometer found that 48 percent of small businesses are experiencing problems with cash flow, which is little changed over the past 6 months (49 percent).
“At this time of year businesses are faced with meeting tax and other statutory obligations placing considerable pressure on cash flow,” Mr Green said.
According to the survey, a contributing factor to cash flow issues is the length of time that small businesses are waiting to be paid, with 48 percent experiencing delays compared to 12 months ago.
The Barometer showed that 22 percent of small businesses intend to seek new funding for growth over the coming 12 months and 17 percent will be looking for funding to provide working capital.
A further 31 percent will be looking to pay down an existing loan and 22 percent intend to refine existing debt.