The latest wave of the ACA COVID-19 SME Research Tracker shows that as outbreaks persist, revenues continue to fall with 78% of SMEs now reporting a decline due to the pandemic. This is the highest level reported since the inception of the research in early April.
Not surprisingly, the reinstatement of restrictions has worsened expectations in the short term, with just under 50% of businesses located in Victoria anticipating declining revenues over the next 4 weeks.
Consequently, there is an upward trend in the proportion of SMEs reporting to be very concerned about business survival rising to 72%, from 62% in the last wave.
There has also been a significant rise in job losses with 41% of SMEs reporting they have had to reduce their staff numbers compared to 34% only two weeks earlier. This has validated the extension to JobKeeper announced last week.
With the rapid increase in cases seen in VIC and the threat of these cases spreading to other states, there has also been a significant increase in concern regarding personal wellbeing (up to 69% from 50% in the previous wave).
44% of SMEs now believe the Government needs to slow down their approach to winding back restrictions. This is double the 22% at the beginning of July. In line with increased concern, SME decision makers are now much less comfortable travelling or allowing their employees to travel.
The resurgence of COVID-19 is having a devastating impact on SME confidence with much of the tracking data at all-time lows. Despite the extension of the JobKeeper program it is hard to foresee any return in confidence until the curve in Victoria is flattened and any hotspots in NSW and other parts of Australia are controlled.
With concern about business survival rapidly rising, it is unlikely the majority of SMEs will be in a position to survive without JobKeeper when the program is reset in October. Accordingly, the Government must brace for a substantial investment to ensure the employees remain connected to their employers despite the stricter eligibility criteria outlined last week.
Please click on this link to access the full report including subgroup analysis by industry sector, size of business and State. ACA Research and TEG Insights will publish updates of this research to track the impact and response to COVID-19. Hopefully the results will become more positive as we work through this crisis together.
By James Organ, ACA Research