Bankwest’s Future of Business Series reveals positive revenue expectations over the next five years

 

Australian mid-size businesses are preparing for organisational growth and increased revenue over the next five years, according to a new report from Bankwest.

 

The Economy and Finance Report – the second instalment in the Bankwest Future of Business Series – has found the majority of Australian mid-size companies are optimistic about business growth in the mid-term future (the next five years). http://www.bankwest.com.au/connect/insights-information/future-of-business-launch

 

While business leaders share mixed expectations on growth in the Australian economy over the short term (the next 12 months), the Report reveals that a positive outlook for the mid-term future will motivate confident business actions in the coming years. Of the business leaders surveyed, three in five (60 per cent) expect the Australian economy to speed-up in the next five years. The majority (63.5 per cent) of respondents also believe domestic business conditions will improve over the next five years. More than seven in 10 (70.6 per cent) expect their business revenue to increase over the same period.

 

Accompanying this confident outlook, a large number of respondents (45.9 per cent) planning to borrow money in the next 12 months will do so to support their business growth. Organisations in the “expansion” phase said they were looking to develop their businesses through growth into new markets and distribution channels.

 

Respondents who consider their business to be a market leader are more likely to borrow money, with almost one in four (24.1 per cent) expecting to borrow more in both the short and mid-term. In comparison, fewer than three in 10 (29.5 per cent) will seek funding for working capital and a minority (14.8 per cent) intend to pay down an existing loan.

 

“This research tells us that forward-looking mid-market businesses expect to be in a strong position over the next five years,” said Sinead Taylor, Executive General Manager of Business Banking. “History tells us that the businesses that take considered and confident steps now to support their growth agenda will be the ones that have the best prospects to emerge as market leaders in the future.”

 

While mid-size business leaders remain optimistic about business performance, the Report found that the overwhelming majority of respondents believe they will face challenges maintaining cash flow over the short to mid-term. Fewer than one in 10 (7.1 per cent) do not perceive any challenges to their business cash flow in the next 12 months, while only 5.9 per cent do not expect challenges in the next five years.

 

The survey identified increased day-to-day operating costs as the biggest challenge to cash flow in both the short and medium term (55.3 per cent and 52.9 per cent respectively).

 

Over the next 12 months, reduced revenue (40 per cent), losing a key customer (35.3 per cent) and new or increased competition (34.1 per cent) are the next biggest perceived challenges to cash flow.

 

In anticipation of these challenges, the Bankwest Future of Business Report revealed many business leaders have identified approaches that will overcome cash flow obstacles in the mid-term. A vast number of business leaders (51.9 per cent) believe new products and/or services will offer the best solution to cash flow challenges over the next 12 months, whilst 57 per cent of respondents cite this as an answer to cash flow challenges over next five years.

 

Of note, more than two in five business leaders (44.3 per cent) intend to expand into new markets – either geographical or new customer markets – in the next 12 months and almost half (49.4 per cent) expect to do this in the next five years.

 

Furthermore, half of respondents expect their business progression to be driven by client development efforts and natural growth – defined as organic growth and/or economic growth that benefits them and their customers (both 49.2 per cent) – whilst 44.1 per cent say pricing strategies will drive future revenue increases for their business.

 

Bankwest’s previous instalment from the Future of Business Series that looked into Strategic and People Leadership revealed people-based strategies that offer training and career progression opportunities will be key to combatting future business challenges and enhancing business opportunities.

 

“Planning for challenges that may impede the growth of your business is crucial and it’s encouraging to see many business leaders in the Australian mid-market identifying opportunities in diversification and expansion as a means to combat forecasted cash flow obstacles,” Taylor said.

 

“This Report shows us there are bullish expectations for the mid-market and we hope these insights encourage other mid-market players to adopt forward-thinking and confident business strategies.”

 

“At Bankwest we’re investing in developing insights through the Future of Business Series to assist our customers in growing their businesses. Our upcoming instalment, the Innovation Report, will look at the ways mid-market leaders are advancing business practices through innovative approaches that overcome challenges and enhance their market position,” Taylor said.

 

About Bankwest:

Bankwest provides personal and business banking solutions for more than 1.2 million retail and business customers across Australia. Bankwest customers enjoy access to an extensive network of stores and business centres, direct and third party distribution channels, agencies and electronic banking facilities, as well as 24-hour telephone and internet banking. In 2013, Bankwest was named Business Bank of the Year in the AFR Smart Investor Blue Ribbon Awards. Bankwest is a division of the Commonwealth Bank of Australia.

 

About The Bankwest Future of Business Series:

The Bankwest Future of Business Series is a collection of insights taken from research commissioned by Bankwest on the future of business for medium-sized companies in Australia.

 

Bankwest will deliver ongoing instalments of research from an in-depth study involving key business decision-makers across Australia. The insights gained will identify national trends that company leaders believe will shape the future of business.

 

Notes :

• This report has been prepared by CoreData on behalf of Bankwest
• The research was conducted between April 10th and April 17th, 2014 via an online quantitative survey of approximately 50-60 questions, developed and hosted by CoreData
• CoreData’s proprietary panel of more than 132,000 Australian consumers was used to canvass the views of a specific target market – business leaders
• The sample is comprised of 85 respondents, including those in C-suite and senior management positions within mid-size businesses
• The targeted businesses met the following criteria:

o    Minimum annual turnover of $1 million

o    From the following industries: Agriculture and forestry, education and training, retail trade, professional services, light manufacturing, wholesale trade, financial and insurance services, property & business services, franchising, pharmaceuticals and transport