SME owners are working up to 80 hour weeks, losing sleep over cash flow, and moving to non-bank lenders, according to the latest survey.

The result of the latest Scottish Pacific SME Growth Index, a bi-annual poll of 1200 SME leaders, paints a very challenging picture of life as an SME owner.

Scottish Pacific CEO Peter Langham said SME confidence has taken a hit despite the resilience of the sector, which according to the ABS employs almost half of the 10.7 million Australians in the workforce.

“Over the past two years, SMEs predicting revenue decline have almost doubled (13.2 to 24.2 percent), while those predicting increases have halved their growth forecasts (8.6 to 4 percent),” Langham said.

SMEs predicting positive growth now in minority

For the first time since the index began, SMEs forecasting positive growth (48.4 percent) are outnumbered by SMEs forecasting negative growth or no change (51.6 percent).

Cash flow named as top small business concern

“SMEs nominated cash flow as the most stressful element of business. They cited credit conditions as a key barrier to growth. With the index highlighting that cash flow keeps 72.5 percent of respondents awake at night, it’s crucial for these leaders to find the right funding to support their business,” Langham said.

“Businesses are increasingly looking beyond the banks to fund growth and to help ease cash flow concerns. From this time last year, there has been a 30 percent increase in SME owners planning to fund their growth using a specialist non-bank lender, with one in five now indicating their intention to do so.”

The seven key index findings were:

1. Issues keeping SMEs up at night

The top three concerns were cash flow (72.5 percent), not having enough time to get things done (55.2 percent), and customer or supplier issues (39 percent). Seventeen percent were worried about disruption of their business model, and 13.3 percent cited staff issues.

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2. Interest in non-bank lending increasing

Since September 2014 there has been a steady increase in SMEs looking to borrow from specialist non-bank lenders. This has become more marked in the past year as 19.6 percent plan to fund their growth using a specialist non-bank lender, a 30 percent increase from the figure of 15.1 percent in September 2015.

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3. SMEs putting in long hours

A 50-plus hour week is standard for most SMEs (88.8 percent). Almost half of SME owners and senior managers (43.7 percent) are spending 60 to 80 hours a week working on their business, which equates to 12-plus hour days, six days a week.

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4. Business confidence dips

Round five of the index reveals the largest round-on-round and year-on-year percentage changes since reporting began in September 2014. 48.4 percent of SMEs forecast growth in revenue compared with 59.6 percent this time last year. 24.2 percent forecast negative growth compared with 16.8 percent last year.

5. Double-edged sword of technology

Almost half of SMEs (44.6 percent) believe mobile and digital technology has had a negative impact on their work/life balance. Only 15.7 percent of small businesses believe it has led to better work hours or flexible working conditions.

6. New products and services plans on hold

Almost half (48.9 percent) of SMEs report no plans to introduce new products and services during the second half of 2016, up from 33.7 percent a year ago. This may have been influenced by uncertainty following the Federal Election.

7. Entrepreneurs still positive

Australians are still keen to start their own business, despite barriers and tough conditions. The index shows one in 10 SMEs are in start-up phase, a consistent figure since data was first collected in September 2014.