Recession fears aren’t stopping businesses from growing

New research has found 48 per cent of small and medium-sized enterprises (SMEs) in Australia are planning to expand operations this year, despite fears of recession looming.

Small Business Loans Australia’s latest report, Will Aussie SMEs Focus on Growth in a 2023 Recession?, outlined how businesses had a different attitude last year, with only 22 per cent of SMEs saying they were focusing on growth. 2021 was lower again, with only 17 per cent planning growth.

Founder and managing director of Small Business Loans Australia, Alon Rajic, is happy to see companies adapt to economic hardships.

“It is promising to see that almost half of the country’s SMEs consider 2023 as a period of growth for their business,” he said.

“Our research indicates that regardless of a potential economic slowdown, SMEs will continue to be resilient against hardship and confident in their ability to weather tough economic periods, after they have survived a series of unprecedented global and economic disruptions.”

Just about every state in Australia saw growth pick up in 2022. Mr Rajic said that while it is positive to see businesses planning expansion, caution should be exercised as uncertainty in the economy is in the air.

“The challenges of the last three years, while putting a strain on so many businesses, motivated many to change the way they operated and to innovate, which steered many toward online trading and away from traditional shopfront selling,” Mr Rajic explained.

“With the risks of a recession, however, businesses are best to make smart financial choices when expanding. When seeking financing to facilitate growth, it’s a good idea to shop around to secure low interest rates and fees.”

Since 2019, 78 per cent of business leaders have focused on growth in some regard:

• 2019 – 18 per cent
• 2020 – 20 per cent
• 2021 – 17 per cent
• 2022 – 22 per cent

Larger SMEs were more likely to grow in the last few years, with up to 97 per cent growing in some respect since 2019. Micro businesses were less likely, with just 67 per cent expanding.

However, small businesses were more likely to grow at the beginning of the pandemic, with 34 per cent attempting to expand in 2020, while 22 per cent of medium businesses did the same.

Small Business Loans Australia surveyed 210 SME leaders across Australia. This included micro-businesses, small businesses, medium businesses, and a small number of large businesses.

Jack Campbell

Jack is the editor at HR Leader.