Aussie firms to tighten purse strings in 2024

By Our Reporter
Economic growth in Australia is still below historical trends in the last quarter

As we step into 2024, a significant shift is on the horizon for Australian businesses, particularly in their financial strategies. A comprehensive survey reveals a growing trend among business owners towards a more conservative approach in borrowing and investing.

The survey, conducted by Small Business Loans Australia, provides a revealing glimpse into the mindset of Australian business owners amidst economic uncertainty. It paints a picture where 90% of businesses across Australia are gearing up to be more cautious with borrowing, while a notable 69% are planning to hold back on investments in areas such as equipment purchase or team expansion. This cautious approach comes in the wake of continued economic sluggishness, prompting a reassessment of financial strategies across the board.

Diving deeper into the survey, which involved 202 directors and decision-makers from various business sizes, it becomes evident that the conservative shift is not uniform across all business types. Notably, medium-sized businesses, with employee numbers ranging from 20 to 199, are exhibiting a particularly high tendency towards caution, with a staggering 97% aiming to tighten their borrowing habits. In contrast, 82% of smaller businesses share this sentiment, highlighting the varying degrees of financial conservatism across business sizes.

The survey also sheds light on the geographical variances in financial attitudes. Victorian businesses, for instance, stand out with 96% planning to be more cautious in their borrowing in 2024. This figure is comparatively higher than in other states, such as Queensland (87%) and New South Wales (85%). Interestingly, Queensland businesses are more proactive in seeking the best value loans, with 54% dedicating time to this pursuit.

Financial conservatism is also evident in investment strategies, with medium-sized businesses and firms in Queensland and South Australia being particularly reluctant to reinvest in their operations. This is in stark contrast to Victorian businesses, where only 62% are holding back on investments.

The economic backdrop to these trends is a challenging one, as Alon Rajic, Founder and Managing Director of Small Business Loans Australia, points out. Australia’s economic growth continues to trail historical trends, with the cost-of-living and higher interest rates adding to the financial strain on businesses and consumers alike. Rajic’s observations highlight the impact of these economic conditions on business operations, including issues such as delayed payments, difficulties in salary disbursements, and challenges in maintaining operational liquidity.

However, it’s not all doom and gloom. Rajic also points to a silver lining, noting the resilience of the Australian economy and the supportive measures put in place by the Federal Budget. Initiatives like the instant asset write-off and small business energy incentives are seen as vital lifelines, offering some relief to businesses navigating these tough economic waters.

The financial landscape for Australian businesses in 2024 is set to be marked by caution and a reevaluation of risk. As they navigate through these uncertain times, the strategies adopted by these businesses will be crucial in determining their resilience and ability to adapt to an evolving economic environment.

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