Aussie businesses are ready for anything as pandemic delivers a lesson in resiliency

MYOB’s latest SME Success Report has revealed that Australia’s small business owners are 12 per cent more resilient than they were prior to the pandemic and are better equipped to face future disruption.

The report collects four years of anonymous data from the nation’s small businesses, with the Resilience Index tracking balance sheet strength, gross income margin and invoice payment times to provide a resilience score.

MYOB’s data shows that pivoting behaviours adopted during the pandemic have prepared small businesses in planning for their future growth.

Small business confidence improving

Additionally, MYOB found 78 per cent of small business owners surveyed have the same or more appetite for risk and more than half (52 per cent) have higher business confidence than before the pandemic.

MYOB CEO Greg Ellis says the data provides rich insight into the strength of Australian SMEs, and their ability to withstand future disruption.

“Now we’re moving closer to COVID-normal, we can look back on how SMEs have fared throughout this challenging period, and how equipped they are to operate in this environment,” Mr Ellis said.

Cash flow and profitability

The balance sheet data in the Current Ratio Index indicates small business cash flow levels stayed high during the first year of the pandemic, after being initially bolstered by the economic stimulus measures introduced by the Government in April 2020. In November 2020 the index was 23.4 percentage points higher than the January 2020 baseline and mostly remained that way, up to 25.8 per cent in December 2021.

Profitability metrics did not see such significant change, though they still improved. In May 2020 gross profit margin was 7.5 per cent higher than in January 2020 but dropped a few points and ended 3.6 per cent up in December 2021.

“It’s encouraging to see stability within SMEs, even after government funding was reduced, improving their resilience against further challenges,” Ellis said.

“Holding onto higher cash reserves for emergencies bolsters resilience, though investing in growth opportunities and keeping the economy flowing is what will keep the SME sector thriving long term. The survey results show strong levels of confidence, which is an encouraging sign for long term recovery.”

Invoice payment times

Around the onset of the pandemic, small business invoices were paid faster with the On Time Invoices index 8.8 per cent up in November 2020 compared to January of that year, a trend that the data suggests is continuing. Surveyed small business owners and operators said the top reasons for faster payments include applying more effort to ensure timely payment (40 per cent), customers are more conscientious (39 per cent), and changing how their invoices are issued (38 per cent).

“It’s unsurprising that business owners would be more conscious of invoice payments when they’re in survival mode during the pandemic. Seeing customers more conscientious and supportive of SME invoice payment times is a welcome outcome, and one that will greatly assist with cash flow into the future,” Ellis said.

“If the last two years have taught us anything it’s to expect the unexpected. For the country’s SMEs, moving to COVID-normal has meant continuing adaptation of business operations. While it’s by no means been an easy road, the resilience of the sector is strong and will hold them in good stead for the next chapter.”

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