What small business owners are expecting in 2019
Since 2004, the SBDC has been asking small business operators what they are expecting for the year ahead in relation to:
- the impact of the economy;
- anticipated business profitability;
- the cost of employing and retaining suitable staff; and
- expected changes and challenges within the business.
Business expectations survey 2019 results
The 2019 survey was completed by 82 respondents from all sizes of small business:
- 19 respondents had no employees
- 23 respondents had 1-4 employees
- 28 respondents had 5-19 employees
- 12 respondents had 20+ employees
Chart 1: Industry breakdown of survey respondents
- Impact of the economy
- Overall sales/revenue
- Unit cost of materials and supplies
- Selling price
- Business profitability
- Cost of employing staff
- Ability to find and retain suitable staff
- Expected changes to the business
- Challenges for 2019
1. Impact of the economy
Respondents were asked whether they believed the economy would have a positive, negative or neutral impact on their businesses in 2019. Businesses are feeling more optimistic about the economy compared to 12 months ago, with 41.5 per cent expecting a positive impact, up from 31.7 per cent in 2018. The level of negative sentiment also decreased from 46.7 per cent in 2018 to 40.2 per cent in 2019. This is the first time since 2014 that positivity about the economy outnumbered negativity (albeit by a marginal amount).
Chart 2. Expected impact of the economy on respondents' businesses over the next 12 months
2. Overall sales/revenue
Over 41 per cent of respondents indicated they expected an increase in the overall sales/revenue of their business over the year ahead, down from 52 per cent last year. Just under a third of respondents (29.3 per cent) indicated they expect their sales/revenue to remain relatively stable in 2019. Just over 29 per cent of respondents indicated they expected a decrease in overall sales/revenue in the next 12 months, up from 12 per cent in 2018..
Chart 3: Expected sales/revenue of respondents' businesses over the next 12 months
3. Unit cost of materials and supplies
Half of respondents (50 per cent) indicated they expected the cost of materials and supplies to increase in 2019, decreasing from 67 per cent in 2018. Many expect costs to remain stable, while only seven per cent anticipate a decrease.
Chart 4: Respondents' expectations of the cost of materials and supplies
4. Selling price
This year sees an equal proportion of respondents expecting their selling prices to either increase or decrease over the next 12 months, with both sitting at 24.4 per cent. This is a significant drop from 2018 where 45 per cent of respondents expected their selling price to increase. There has also been a slight increase in the number of people expecting selling prices to remain stable, from 45 per cent up to 51.2 per cent.
Chart 5: Respondents' expectations for their businesses' selling price over the next 12 months
5. Business profitability
Respondents remain optimistic about the expected profitability of their businesses, with 39 per cent expecting an increase in profitability in 2019, down just one per cent from 2018. Just over a third of respondents anticipate a decrease in profitability for the year ahead (34 per cent), with more than a quarter (27 per cent) expecting profitability to remain stable (down from 36 per cent in 2018).
Chart 6: Respondents' expectations for the profitability of their businesses over the next 12 months
6. Cost of employing staff
Over 72 per cent of respondents indicated they are expecting the cost of employing staff to increase in 2019. This is up from 60 per cent in 2018 and 45 per cent in 2017. Almost one in ten (9.2 per cent) of respondents see the cost of employing staff decreasing in 2019, while just under 20 per cent of respondents expect it to remain stable.
Chart 7: Respondents' expectations for the cost of employing staff over the next 12 months
7. Ability to find and retain suitable staff
Businesses are feeling less optimistic than in previous years about how easy it will be to find new workers in 2019, with 45 per cent of respondents indicating they expected it to be more challenging. A further 37 per cent of respondents indicated they expect no change in the year ahead, while 18 per cent have indicated that it will be easier to find new employees (up 10 per cent from 2018).
Chart 8: Respondents' expectations for the ease at which their businesses will find new employees over the next 12 months
When asked about retaining suitable staff this year, 17.2 per cent of respondents indicated that it will be easier (up 12 per cent from 2018), while just under half of respondents indicated that they expected it to be more challenging in 2019.
Chart 9: Respondents' expectations for their ability to retain suitable staff over the next 12 months
8. Expected changes to the business
Respondents were asked whether they had planned to make any changes to their business during 2019, and were presented with a list of possible options to choose from (multiple responses were allowed).
The most common change reported this year (in line with previous years) was to increase their customer base (24 per cent), followed by exploring new markets (19 per cent) and update existing equipment or technology (12.2 per cent). Encouragingly, one in ten respondents indicated that they would employ more staff in the coming year (although this level is down from last year). It is also interesting that 2.5 per cent of respondents indicated that they were not planning any changes to their business over the coming year, while 5 per cent were looking to close or restructure.
Chart 10: Respondents' expected changes to their business over the next 12 months
9. Challenges for 2019
Respondents were asked to indicate what their top three challenges would be for 2019 from a list of options. Respondents most commonly reported that attracting customers would be a challenge for their business (13.8 per cent), followed by the current economic climate (10.4 per cent) and increasing operating costs (nine per cent). These results are similar to those found in 2018, with attracting new customers being the biggest challenge for each of the last three years.
Chart 11: Respondents' anticipated challenges for their business over the next 12 months
If you would like to participate in future surveys please contact us.