Business growth stagnates amongst SMEsDOWNLOAD
Thursday, 1 September 2011: The Black Ink® survey of small to medium accounting and legal practices has revealed a stagnation of business growth amongst SMEs, with only 3.8% of respondents saying their clients’ had experienced business growth during the preceding three months, down from 45.1% in June 2010.
Partner and National Leader of Deloitte’s Black Ink® program, Neil Cussen, said the result showed the middle market was struggling and that the road to financial recovery could take longer than expected for some sectors of the economy.
“SMEs are increasingly coming under pressure from a range of international and domestic economic influences – sovereign debt issues, falling consumer sentiment, increased regulatory changes at home and the spate of natural disasters have all conspired to have a detrimental impact on many businesses.”
“The uncertainty this creates has seen many members confirm that capital expenditure is off the agenda while the market remains so volatile and the lack of growth is likely to hamper capex spending in the short to medium term,” Mr Cussen said.
According to Mr Cussen, the uncertainty created by the high Australian dollar has also had a significant impact on business with more than half the Black Ink® respondents reporting that this had a negative impact on their clients.
“On their own, these pressures are enough to have a significant impact on many businesses, however, it seems these are being exacerbated by an increasingly aggressive approach by the Australian Tax Office in dealing with small to medium enterprises.”
“The experience of Black Ink® members appears to reflect this view with 80% of respondents reporting they had at least one client who had received demands, enforcement notices or some form of action from the ATO during the last quarter, while 46.3% had between two and five clients contacted,” Mr Cussen said.
“It seems the ATO has experienced a significant shift in attitude since the height of the GFC when it was adopting a more conciliatory approach to dealing with business. However, while the perception might be that Australia has escaped the worst of the GFC, the reality is that many SMEs are experiencing significant financial difficulty which is only being compounded by this aggressive tax approach.”
“The Black Ink® survey was conducted in July 2011, prior to the unprecedented market volatility in early August, which is likely to have increased the level of uncertainty for SMEs.”
Deloitte’s Black Ink® network provides specialist financial advice to member suburban legal and accounting firms in fields including tax, insolvency, superannuation, forensics, business forecasting and corporate finance.