Business confidence has plummeted according to the latest Sensis Business Index which interviewed over a thousand small to medium companies in March. The survey reported a 53 point drop in confidence levels over a ten-day period. Even before the lockdown, the survey found small businesses were feeling stressed from everyday pressure and the summer’s devastating bushfires. The COVID-19 lockdown only exacerbated the small business sector’s sour outlook on the future.
“Australia’s small businesses were feeling the squeeze before the impact of the coronavirus hit,” said Sensis CEO John Allan. “But the massive fall in confidence in just a matter of 14 days, while not a surprise, was the fastest drop in the 25-year history of the survey”.
The harsh truth of the coronavirus lockdown could be seen playing out during the Sensis sampling period. At the beginning of March, only 7% of small businesses said the virus was severely impacting their operations. This figure more than quadrupled in two weeks.
“As time progressed the stark reality of COVID-19 hit Australia’s small businesses quickly with sentiment changing mid-survey,” Mr Allen says.
By the third week of March half of all small to medium businesses were now worried about the future. “The extraordinary speed of the change in confidence is not something we’ve ever witnessed before,” Mr Allen says.
During the March quarter, a third of small businesses saw the value of their goods or services decline and nearly half said they had to pay more for goods and services they use in their operations.
Despite the troubling circumstances, over one-third of businesses still reported being confident about the future leading up to the lockdown. It’s likely that they were hopeful for a quick recovery and confident that the lockdown would work suggested Allen.
However, some small businesses felt the pinch more than others. South Australia small businesses, perhaps as a result of the double hit from the bushfires and the pandemic, are the most pessimistic. Over half report low confidence. Victorian small businesses, on the other hand, are the least confident about the future of the economy as a whopping 70% believe the economy is shrinking.
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Overall, the survey found 60% of small to medium businesses across the country think the economy will be in worse shape this time next year.
Mr Allen he is interested to see if this sweeping and historic lack of confident is long-lived. “Australia’s SMB’s [small to medium businesses] are an extremely resilient bunch and I’m optimistic of them bouncing back from COVID-19, our next report in July will capture their sentiment towards recovery.”
The Sensis Business Index is based on 1,015 online interviews conducted between 4 and 28 March 2020 with small and medium business proprietors or managers employing up to 199 people. This sample is drawn from metropolitan and major non-metropolitan regions throughout Australia.