SMB profitability hits rock-bottom ebb

SMB profitability hits rock-bottom ebb

Australian small businesses' profitability is at its weakest point in at least 18 years, with half of businesses experiencing a decline during the last quarter, according to a new survey.

Telstra's (ASX:TLS) Sensis division on Tuesday announced that its Business Index profitability indicator had fallen to the lowest point in the 18-year tenure of the Index series.

Only two in ten respondents from the survey of SMBs reported increasing profitability, and businesses predict further declines in the coming 12 months.

The weakness was recorded across all industries – although some sectors stayed more resilient than others. Retail predictably appears to have taken the biggest hit.

The survey also uncovered negative indicators in every state and territory, Sensis said, with national indicators for sales and capital expenditure also strongly negative.

In defiance of the ongoing decline in job advertisements, the survey indicates that employment at SMBs did not shrink during the quarter - but neither did it increase. Indicators for wages and product or service prices stayed in positive territory.

The slumping profits have had an impact on small business confidence – with this indicator nearly halving during the quarter - and outlooks about the economy – which fell further into the negative.

As a result, some business leaders are giving up. The survey shows an increase in the percentage of respondents looking to close or sell off their businesses to 17%, from 12%.

But many small businesses plan to tackle the market weakness with the introduction of new products and services. Others plan to leverage more digital channels, including social media, to try to grow sales.

TLS shares declined 1.33% during Tuesday's trading to $2.970.

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Tags employmentsmbsensisSensis Business IndexASX:TLSbusiness confidenceeconomic indicators

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