The annual Private Companies survey of one of the largest professional services firms in the world, KPMG, shows that 70% of the private firms in Australia have recovered and appeared positive about the mid year economic outlook, up from two percent in 2009.
KPMG’s head of private enterprise Marco Di Sebastiano said that conservative borrowing practices had enabled businesses to stay resilient.
“Australian private companies have survived the financial crisis because they adopt a more conservative approach to business planning. Generally, they focus on the longer term and stay within the bounds of their core business. This enables private companies to remain resilient through tough times and periods of uncertainty such as is the current economic uncertainty in Europe”, said Di Sebastiano.
Mr Di Sebastiano also said that KPMG has observed an increase in defaults, despite domestic banks continuing to see this market segment as an area for growth. He cautions that those which have not yet secured funding face a challenge as banks remain more selective about which sectors and customers to support.
“Interestingly, the survey indicates that only 25 percent of this sector is looking for bank funding, highlighting their self-sufficiency in difficult times. However, the survey found maintaining and developing banking relationships has been a preoccupation for many”, Di Sebastiano added.
The poll by KPMG was taken in April and May as the Greek debt crisis sparked turmoil on global financial markets.
Two-thirds of respondents were planning to hire staff during the coming year, but the same proportion in the survey saw skills shortages as an impediment in the past year.
About 40 per cent were already using skilled visa applications, compared with 30 per cent in 2009.
Most of the survey’s respondents said growth is high on the agenda with 75 percent ready for business expansion, a marked difference from last year’s finding where 30 percent of survey respondents intended to downsize operations.
Employers were likely to focus on training existing workers rather than hiring new people, in order to deal with a labour shortage, he added.
Ninety per cent of respondents said they were moderately or well prepared to deal with changes in the Australian economy in the coming year.
“Although our survey was conducted in April 2010, in the weeks since then our recovering business environment has again been tested. However, as we found in the 2008 and 2009 surveys, this survey reveals that Australian private companies have the capacity to steer their way through tough times.
“It’s pleasing to see the positive outlook, but my concern is that many businesses may be reading too much into the rebound. Now more than ever they must plan well, with particular focus on funding and staffing, in order to position themselves as the economy recovers,” finished Mr Di Sebastiano.
