According to new research commissioned by SME lender OnDeck, Australia’s small- to medium-sized enterprises (SMEs) are bracing for “a double whammy” of disruption from the back-to-back Easter/Anzac Day public holidays.
Over one in four (27 per cent) of SMEs expect the Easter/Anzac Day period to disrupt normal trading.
However, businesses operating in the accommodation/food services sector expect an uptick in business, with more than half (59 per cent) saying that they think business will be boosted over the holiday period.
More than a quarter (29 per cent) of SMEs expect cash flow to take a hit over the period, with 59 per cent saying that improved access to cash flow would help their business weather disruptive events such as public holidays.
Cameron Poolman, OnDeck Australia’s chief executive officer, commented: “Negativity around the proximity of Easter/Anzac Day is likely being driven by the need to manage employee leave requests.
“One in two (52 per cent) SMEs expect staff to take leave over the period, with one-third (31 per cent) of these business owners expressing concerns about possible staff shortages.
“A similar proportion (29 per cent) are expecting their cash flow to shrink over the public holiday period.”
Impacts compounded by federal election
Compounding the effects of the multiple holidays in April is the federal election, which has been called for 18 May.
According to the OnDeck research, 59 per cent of SMEs said that major political events such as elections have impacted their business in the past.
Of these SMEs, 47 per cent experienced a slowing of normal business operations and 30 per cent reported a drop in revenue.
Mr Poolman stated: “The possibility of a change in federal government often sees consumers and businesses put major purchases or projects on hold — at least until the polls have delivered a clear result. While that’s understandable, the SME sector bears the brunt of this ‘wait-and-see’ approach.”
The survey also found that less than a fifth (17 per cent) of SMEs were prepared for political events, but more than half (59 per cent) agreed that improved access to cash flow would help their business weather a major event, rising to 69 per cent for those with annual turnovers exceeding $200,000.
Speaking of the figures, Noah Breslow, the global CEO of OnDeck, commented: “Cash flow is the lifeblood of many SMEs. So, it makes sense that additional funding can help SMEs navigate difficult trading conditions that can accompany a critical event — be it a federal election or back-to-back public holidays.
“We know, however, that SMEs face a high rejection rate from mainstream banks: 23 per cent have been knocked back for bank funding in the past. Among those that have sought finance, 29 per cent say the protracted application and approval process has negatively impacted their activities — so it’s not a seamless solution. Moreover, 65 per cent of SMEs were negatively impacted by being turned down by a bank for finance.”
However, the online lender found that 44 per cent of SMEs would consider an online lender as a source of cash flow funding to be better prepared.
“Online lenders offer a quick and easy application process, and we are not just a positive option for SMEs rejected by their bank,” Mr Breslow concluded.
“Online lenders such as OnDeck also offer the advantage of speed and convenience for those businesses that would be eligible for bank lending, and this can be a critical advantage in preparing for events that are likely to have a short-term impact.”
