(18 October 2021 – Australia) The pandemic’s impact on small to medium sized enterprises (SMEs) was significantly softened by business owners taking action to restructure in the past year, national research by ScotPac has found.
The SME Growth Index is Australia’s longest-running in-depth research on SME growth prospects, conducted independently by East & Partners on behalf of leading small business lender ScotPac. East & Partners conducted direct interviews with 1255 SMEs for the long running and found four in 10 had restructured. For more than one in four of these SMEs, restructuring averted insolvency or bankruptcy.
The smaller the business the stronger the impact of restructuring on survival, as one in three smaller SMEs (in the A$1-5m revenue bracket) said restructuring saved their business.
For SMEs the main benefit of restructuring was keeping the business viable. Other key benefits include boosting cashflow (22.8 percent), cutting costs and reducing overheads to boost the bottom line (15.8 percent), retiring debt (12 percent) and improving productivity (11.2 percent).
“The research shows clear benefits for SMEs who are willing to restructure to adapt in the current business environment. A key component of restructuring can be looking at how the business is funding. This may mean looking outside traditional bank sources for appropriate funding” stated ScotPac CEO Jon Sutton commented on the results.
“Trusted advisors such as accountants, brokers and bookkeepers should be talking to SME clients to see if potential positive impacts could come from restructuring. The current strong reliance on restructuring indicates business owners’ desire to adapt, at a macro level, to dynamic market conditions. At the micro level, we also see SMEs making a push to control cashflow more tightly” Mr Sutton added.