Time ripe for SA businesses to flourish, says Business SA–William Buck Survey of Business Expectations
FOR the first time in more than five years, South Australian businesses have outpaced their state counterparts in future confidence, setting the scene for businesses to thrive, a new quarterly survey shows.
FOR the first time in more than five years, South Australian businesses have outpaced their state counterparts in future confidence, setting the scene for businesses to thrive, a new quarterly survey shows.
The September quarter Business SA – William Buck Survey of Business Expectations – released this morning, shows business confidence now tops the nation and conditions are significantly improving.
This compared to a year ago when SA business confidence was lower than that in Tasmania, NSW and Queensland.
General business conditions rose a considerable 11.1 points in the September quarter to 103.6 points.
While confidence dipped slightly to 114.2 points (from the previous quarter), businesses are still very positive about the state’s economy, up 29.1 points since September last year, and up 16.7 points over the decade.
Business SA said the confidence was driven by business conditions “catching up” with the rise in optimism following the change of state government in March.
“Still buoyant after a change in government earlier this year, owners and operators are starting to see their fortunes slowly turning around, and it’s a wonderful sight to behold,” said Anthony Penney, Business SA’s executive director, industry and government engagement, pictured.
“The proof of the improvement in conditions is in the economic pudding, and it has been rising in the business operations oven.”
Local producer 4 Ways Fresh is one example of an SA business that is growing and expanding while managing the challenge of high costs of water, power and labour.
He said actual survey results showed more than half of the respondents found the cost of overheads were up, 44.8 per cent found materials had gone up, and total sales and revenue were down for 30.4 per cent.
“There’s much more to the story,” Mr Penney said. “If you hark back to the June quarter, it’s evident where the improved conditions are coming from. The comparison shows businesses expected those conditions to be much worse than they were. “
Businesses had expected to pay much more for wages, they expected fewer orders, they anticipated their selling price to be lower, and they certainly didn’t think their total sales or revenue to be so high.
“The great news emerging points to much higher sales and revenue growth, increased profitability, and lower expenditure than anticipated.
Other contributing factors were a cautious State Budget – held several weeks before the survey opened – and lower Emergency Service Levy notices landing in letterboxes.
Accounting firm William Buck’s managing director Jamie McKeough said businesses were more optimistic about the coming quarter, which is a very positive sign for the economy.
Export sales were higher than anticipated, up for 12.2 per cent of businesses compared to a 5.4 per cent of operators in June.
He said it was also positive to see that more than 57 per cent of businesses were seeking to grow, rather than simply maintain market status or simply survive.
“We know that 22 per cent are planning to hand their business to the next generation within five years, and 19 per cent want to sell.
Given that’s very few, those that want to grow by merging or acquiring new businesses will have to be proactive to find those potential future gems,” he said.
The quarterly Business SA-William Buck Survey of Business Expectations is the longest-running survey of its kind in SA.
SA producer ready for a rich harvest
ONE of the state’s leading horticultural producers, Virginia-based 4 Ways Fresh has seen record growth and profit in the past six months and is gearing up for major expansion decisions this year.
Founder and chief executive Duy Ly fled Vietnam in 1986 along with his brother Tam and their parents Dong Ly and Dep Doan.
An engineer, Duy Ly set up 4 Ways Fresh nearly two decades ago.
Today, it employs 60 staff across three sites in South Australia – Virginia, Waterloo Corner and Buckland Park – and a site in Western Australia. He says it is all about taking risks and managing them in an industry that is battling high costs of labour, power and water.
Having a wholistic business model has helped and now the business is ready to expand interstate and overseas. The seed-to-market operation grows, packs and distributes capsicums, tomatoes, cucumbers and other produce across the country – and into Asia.
“We have grown so much we are looking at acquisitions to expand over the next two years locally and into Queensland and Darwin.
We also need to weigh up further investment in Australia against investment in Asia as we compete with other ASEAN countries for growth in exports.
“So far we have managed our power and water costs through solar and rainwater investments. But internationally, we are competing on price,” he said.
He said the Federal plan to introduce special regional visas would drive further investment into horticulture in regional areas.
“The more money we can we save on labour and such costs, the more investment we can make into the actual business,” he said.