Business expectations

Since 2004, we have called on WA’s small business owners to provide feedback on their expectations for the coming year. This survey gauges views on issues such as:

  • the impact of the economy
  • the cost of employing and retaining suitable staff
  • expected changes and challenges within the business
  • anticipated business profitability

Business expectations survey 2016 results

The 2016 survey was completed by 58 respondents from all business sizes, as can be seen in Table 1.

Table 1: Survey sample - number of employees – 17 survey respondents had 0 employees within the business
– 25 survey respondents had 1-4 employees within the business
– 8 survey respondents had 5-10 employees within the business
– 5 survey respondents had 11-20 employees within the business
– 3 survey respondents had 20+ employees within the business

1. Impact of the economy

Respondents were asked whether they believed the economy would have a positive, negative or neutral impact on their business in 2016. Although not as buoyant as 2014, there has been certainly been an increase in positivity since last year, with 31% of respondents having a positive outlook in 2016 (Chart 1).

Chart showing the expected impact the economy will have on respondents businesses over the next 12 months

2. Overall sales/revenue

Less than half of the 2016 survey respondents indicated that they expected an increase in the overall sales/revenue of their businesses. This is a 10% decrease from last year and the lowest level in six years. A very similar proportion of respondents expect a decrease or no change at all (28% and 29% respectively) in their business sales for the year ahead (Chart 2).

Chart showing expected revenue oever the next 12 months

3. Unit cost of materials and supplies

The vast majority of respondents (76%) indicated they expected the cost of materials and supplies to increase in 2016, with the remainder anticipating these costs to remain the same (Chart 3).

Chart showing expected costs of materials and supplies over the next 12 months

4. Selling price

Respondents’ expectations for selling prices have declined since last year, with 29% expecting their selling prices to increase (down 13.4% from last year). Just over half (53%) of respondents expect their selling prices to remain the same for the next 12 months (Chart 4).

Chart showing expectations of businesses selling prices over the next 12 months

5. Business profitability

In relation to the expected profitability of their businesses, this year’s survey respondents are the least confident compared to previous years. Only 35% reported that they expect an increase in profitability over the coming year which is a decrease of 2.8% from 2015, and 24% from 2014 (Chart 5). This year recorded the highest level over the past six years of respondents that anticipate their businesses will suffer from a decrease in profitability for the forward 12 month period.

Chart showing expectations on profitibility of their business in the next 12 months

6. Cost of employing staff

There has been a slight increase in the expected cost pressure of employing staff, with 41% of respondents expecting their staff costs to increase in 2016 (Chart 6). Just over a third of respondents expect their employment costs to remain the same over the coming year, while 2% anticipate staffing costs to decrease.

Chart showing costs of employing staff over the next 12 months

7. Ability to find and retain suitable staff

Just over a third of respondents expect that their ability to attract and retain staff will remain unchanged over the coming 12 month period (Charts 7 and 8).

There has been a slight decrease in the number of respondents that expect it to be easier to attract staff in the next 12 months, down from 18.8% to 16%. Respondents also expect it to be harder to retain staff, with 19% (up from 9.4% in 2015) indicating that their ability to retain staff over the year ahead will be more challenging.

Chart showing the expected ease at finding new employees over the next 12 months
Chart showing expectations for their ability to retain staff over the next 12 months

8. Expected changes to the business

Each year, respondents are asked what changes they anticipate making to their businesses over the coming 12 months. This year, the most frequently cited responses were exploring new markets (21% of all responses¹), updating existing equipment or technology (20%), and employing more staff (10%) (Chart 9). Compared to last year, there has been an increase in the number of respondents that are not planning any changes to their business in the next 12 months.

Chart showing expectation for the changes they will make to their businesses over the next 12 months
¹ Multiple responses accepted.

9. Challenges for 2016

Over the next 12 months, respondents anticipate that the main challenges their businesses will be faced with include increasing operating costs (15% of all responses²), attracting new customers (14%); increased competition (11%); and wage costs (11%) (Chart 10).

Chart showing anticipated challenges for the year ahead
² Multiple responses accepted.

10. Additional comments

Respondents were given the opportunity to comment more generally about their business expectations for the year ahead, with some of the comments outlined below.

“Optimistic about the new year with more people travelling within Aust[ralia].”

“I am looking to start my business this year as I believe the time is right for my product. A lot of heat has gone out of the market and I'm expecting prices to be good and people in general to be more down-to-earth than they've been in the past.”

“Exchange Rate will directly affect our export business, especially if it is less than 25 Baht/AUD it will increase the number of customers to visit and study in Australia.”

“Clients in mining industry and agriculture or servicing those industries - all are experiencing decreased income and therefore looking to cut costs.”

“I view the next 6 months as being positive, out of my hope that we can exploit the market for growth. People look for cheaper services when times are tough and some of our best wins have come due to tight economic times.”

“Competition in the field of architectural professional services is and will remain very strong with the private commercial/industrial sector developments being slow due to high vacancy rates. As a result, we are exploring new markets and reviewing internal processes to increase efficiency and reduce costs to retain our profitability.”

“There is a great deal of pessimism and concern in the wider community, at a business and consumer level. Spending is contracting and very few people feel as though they want to expand their spending, rather reduce their costs and reduce debts. This is not a good recipe for business growth across WA and the country generally.”

“Bunbury is traditionally fine during a downturn because of the economic diversity so business needs to be able to explore new markets as conditions change. I think the economy will remain about the same for 2016 and start to pick up later as interest rates start to move higher.”

“Not good economy and wage costs is too much because of government increased minimum wage.”

“Would like more training on use of social media to increase business.”

“Wanted to do more volume keeping the same overheads and earn profit.”

“I work in graphics/textile imaging/screen printing, 35 years+, our industry has been pillaged from ''overseas'' for some decades now…”

“As a small independent enterprise, we expect to experience increased competition from large companies and corporations that not only control the quality and supply of materials, but are also given unregulated control over the distribution of work for local public contracts, this companies are not required to have any fair trading policies and procedures in place when they are granted contracts and their performance in dealing with local contractors is not monitored by the issuing agencies. We expect to diversify and find alternative and innovative sources of business in the year ahead in order to stay in business, be competitive and hope to be able to go ahead with our plans to recruit more permanent employees and apprentices, and allocate further resources to our business.”

“It will be my second year in business so I believe my business will grow with referrals and good reputation.”

“I am planning to reach the oversees tourists with the help of the website and increase the number of tours provided. To achieve that, I am also going to hire some casual staff and train them to let me focus on business development issues.”