Conditions are worsening for small businesses

Many of us will already be aware that small businesses across Australia are having a hard time of things, but a new study has shown that the situation is far worse than a lot of people think.

Although the Australian economy has been performing relatively well so far this year, plenty of less established enterprises throughout the country have seen their finances stretched to the limit.

The Australian Chamber of Commerce and Industry (ACCI) has released a new report that shows just how desperate some corporations have become.

General small business conditions continued to deteriorate in the June quarter of 2012, despite signs of stabilisation in the past two quarters.

A lot of companies have reported that their sale prices have taken a hit recently, but their costs have continued to rise at the same time.

Director of economic and industry policy at the ACCI Greg Evans said performance figures relating to firms in the non-mining sector are "alarming".

"Small businesses are concerned that while their selling prices have fallen to record low levels, their input costs remained elevated," he remarked.

The ACCI also conducted an index for Expected Economic Performance, which aimed to assess companies' attitudes towards the Australian economy. The barometer edged down from 41.6 to 41.3 in the June quarter and has fallen by 2.7 points this year.

Clearly, entrepreneurs are far from confident that the economy will continue to improve and this was perhaps reflected in a downturn in the uptake of business loans in the second quarter of 2012.

According to Veda, the demand for credit dropped considerably during the three-month period, as fears about the state of the eurozone continued to mount.

Mr Evans said the immediate future looks increasingly bleak for small business owners.

"Small businesses can expect further headwinds in coming months following the continued economic and political uncertainties in Europe, the slowdown in China and subdued consumer sentiment," he added.

Mr Evans also stated that the government's new carbon tax initiative will only put further strain on the finances of small enterprises.

Have a question about business banking? Ask the money gurus at Mozo Answers.ADNFCR-1761-ID-801433170-ADNFCR