Australian SMEs are emerging from the COVID-19 pandemic with greater stores of resilience and are better equipped to deal with future disruptions, according to new research from MYOB this week.
Individual small businesses have shown incredible resilience over the past two years, but the MYOB research provides a comprehensive look across the sector by pulling together four years of anonymised data from more than 100,000 businesses to compile a resilience index based on financial metrics, including the strength of SMEs’ balance sheets, gross income margins and invoice payment times.
Overall, MYOB’s SME Success Report shows SMEs have become 12% more resilient from their pandemic experiences.
From a low point of under 100 in March 2020, when the first COVID-19 support packages were announced, the MYOB Resilience Index increased to 110 as of December 2021.
The government stimulus measures bolstered SME cashflow levels throughout the first year of the pandemic, according to the balance sheet data used to calculate the index, while profitability levels improved slightly during 2021 following a sharp drop prior to the injection of government financial support in early 2020.
MYOB says the behaviours learned during the pandemic — included holding greater cash reserves and applying more effort to ensure invoices are paid on time — have helped businesses to better prepare and plan for future growth.
“It’s encouraging to see stability within SMEs, even after government funding was reduced, improving their resilience against further challenges,” says MYOB CEO Greg Ellis.
“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,” he added.
A survey of 580 SME owners and operators at the end of January, released by MYOB alongside the index, shows around half of business owners are more confident than before the pandemic, which Ellis says is an “encouraging sign for long term recovery”.
However, Ellis says this greater store of resilience will also be critical for small businesses in Queensland and New South Wales that are being affected by the floods.
“Our thoughts are with the businesses that have been impacted by the extreme weather along the east coast. Businesses quite rightly will have their attention focused on the impacts of these devastating floods on their families and communities,” Ellis tells SmartCompany.
“The major challenges of the last two years have demonstrated the unpredictability every business can face. Anything businesses can do to build resiliency into their plans is very valuable in these uncertain times.”
News Editor
Prior to joining SmartCompany, Eloise was news editor at Books+Publishing, the trade press for the Australian book industry. Eloise has degrees in media and communications, marketing and business management, and political science. You can follow her on Twitter at @ellykeating.
