Sensis Business IndexAustralia’s Leading Small and Medium Business Outlook & Confidence SurveySpring 2020 - September to November 2020

How Australia’s small businesses are recovering from Covid-19

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Introduction

The Sensis Business Index is based on 2,019 online interviews conducted between September and November 2020 (Sept n=506, Oct

n=508, Nov n=1005) with small and medium business proprietors or managers employing up to 199 people.

This sample is drawn from metropolitan and major non-metropolitan regions throughout Australia with targets set for location and

industry on page 23. Glow is responsible for fieldwork and Dynata for sampling.

The Index is a survey of Australia’s small and medium businesses (SMBs) which commenced in 1993 to measure and track:

• SMB business activity over the last three months

• Expectations for the current quarter

• Overall confidence among SMBs

The Index samples SMBs nationally, enabling broad scrutiny of this sector and relevant trends and issues. It examines differences by

location, business size and industry. The aim is to reflect the attitudes and behaviour of SMBs, which comprise some 98%* of Australian businesses and make up 67%* of the country’s GDP (*Deloitte).

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Executive SummaryBusiness confidence has doubled in fourth months.Business confidence about the future of the national economy has doubled since September, according to the November wave of the Sensis Business Index. In September when asked about what the economy would be like in 12 months just 19% said it would be better. That sentiment has risen considerably since, reaching 23% in October, 32% in November and now sits at 38% - double the September figure.Those businesses believing the economy will be worse in a year has almost halved, going from a whopping 56% in September to just 30% in the December Index.The confidence is across the board – every state and territory – and the changes are considerable. In Tasmania, for example, 54% of businesses in September said the national economy would be worse in 12 months. Now that figure is down to just 23%.To see where business think we are heading is really sobering taking into account the lockdowns and sacrifices businesses have had to make. This really is great news coming into Christmas.The loss of JobKeeper at the end of March next year will have the biggest impact on the retail sector with pessimism rising.The November wave showed that 42% of Retail businesses said the loss of JobKeeper would have a major impact on their business. The 42% was up from 33% in November.Overall 31% of businesses said the loss of JobKeeper would have a major impact, 53% a moderate impact and for 15% no difference.The percentage of businesses in Victoria worried about the loss of JobKeeper went down from 35% in October to 28%. However, they were the only ones more optimistic along with Western Australia which went from 27% of businesses worried in the previous wave to just 12% now.All other states were more pessimistic about the loss of JobKeeper with South Australia and NSW increasing significantly in just a month. NSW went from 23% to 33% and South Australia from 27% to now 44% of businesses believing the loss of JobKeeper would have a major impact on their business. Queensland, Tasmania and the ACT were pretty much unchanged.

John AllanChief Executive OfficerSensis

SMB confidence

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SMBs confidence improving

-10%0%

10%20%30%40%50%60%70%80%

Mar

-09

Jun-

09Se

p-09

Dec

-09

Mar

-10

Jun-

10Se

p-10

Dec

-10

Mar

-11

Jun-

11Se

p-11

Dec

-11

Mar

-12

Jun-

12Se

p-12

Dec

-12

Mar

-13

Jun-

13Se

p-13

Dec

-13

Mar

-14

Jun-

14Se

p-14

Dec

-14

Mar

-15

Jun-

15Se

p-15

Dec

-15

Mar

-16

Jun-

16Se

p-16

Dec

-16

Mar

-17

Jun-

17Se

p-17

Dec

-17

Mar

-18

Jun-

18Se

p-18

Dec

-18

Mar

-19

Jun-

19Se

p-19

Dec

-19

Mar

-20

Jun-

20Se

p-20

SMB net confidence 2009-2020

Confident Worried *Net Balance

-10%

0%

10%

20%

30%

40%

50%

60%

70%

Mar-19

Apr-19

May-19

Jun-1

9Ju

l-19

Aug-19

Sep-19

Oct-19

Nov-19

Dec-19

Jan-2

0

Feb-20

Mar-20

Apr-20

May-20

Jun-2

0Ju

l-20

Aug-20

Sep-20

Oct-20

Nov-20

SMB net confidence: 2019-2020

Confident Worried *Net Balance

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SMBs confidence improving

36% 37% 40% 42%37%

43% 40%35% 36% 31%

26%

39%32% 30% 27%

33%

23% 20%

29% 21% 27%20% 22%

19% 21%22%

16%

14%20% 23% 27%

21%

41% 43%

31%37% 36% 37% 38%

46% 44% 47%58%

47% 48% 47% 46% 46%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

OCT NOV OCT NOV OCT NOV OCT NOV OCT NOV OCT NOV OCT NOV OCT NOVNAT VIC NSW QLD SA TAS WA ACT

Are you more or less confident than you were three months ago?

More Less The same

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SMBs confidence improving

14%

42%

22%

16%

7%

12%

46%

20%

14%

6%

12%

46%

24%

13%

5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Extremely confident about thefuture

Fairly confident about the future Neither confident nor worriedabout the future

Fairly worried about the future Extremely worried about thefuture

And thinking about the next six months, how confident do you feel about your business prospects? Would you say you are…

SEPT OCT NOV

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SMB confidence by state

11%15% 16% 13% 10%

19%10%

14% 12% 10% 11%15%

24%

12% 14% 13% 13% 14% 15%9%

4%

45% 39%

27%

51%49%

42%

47%

52%47%

39%

47%35%

45%

37%

42% 42%47%

56% 52%

55%

50%

22% 26%

29%

24%

21%21%

24%14%

18%

26%

21%

18%

23%

33%

28% 27%13%

14% 21%23%

31%

17% 12%22%

9%17% 13% 15%

12% 16% 18% 12%

21%

7%

19% 14%12%

20%

7%

12%9% 12%

6% 9% 7%3% 3% 5% 4%

8% 6% 7% 10% 11%

1% 0% 2%7% 9% 9%

0%5% 4%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

NOV OCT SEPT NOV OCT SEPT NOV OCT SEPT NOV OCT SEPT NOV OCT SEPT NOV OCT SEPT NOV OCT SEPTVIC NSW QLD SA TAS WA ACT

Extremely confident about the future Fairly confident about the future Neither confident nor worried about the futureFairly worried about the future Extremely worried about the future

And thinking about the next six months, how confident do you feel about your business prospects? Would you say you are…

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Factors underpinning confidence – profitability predictions

18%

22%

16%

16%

8%

8%

47%

42%

55%

64%

69%

60%

30%

31%

21%

14%

18%

25%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

The total value of your sales of goods or services

Your overall profitability

Your total wages or salaries bill

The size of your workforce

The average prices you charge for your goods or services

Your cost of sales

How do you estimate the following key indicators will change (excluding normal seasonal changes) for your business over the next three months? (n = 2,019, Sept, Oct, Nov 2020)

Decrease No change Increase

Recovery from Covid-19

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Covid-19 recoveryPercentage of SMBs back to pre Covid levels or well ahead (November).• Tas - 58%• WA - 47%• QLD 42%• NSW – 36%• Vic - 34%• ACT - 33%• SA - 29%

Most pessimistic: 12 month or more to get back to pre Covid levels (November):• SA - 36%• Vic - 33%• Qld - 30%• WA - 28%• Tas - 27%• ACT - 27%• NSW - 25%

12%

27%

13%17%

15% 16%12%

30%

14% 15% 14% 14%

0%

5%

10%

15%

20%

25%

30%

35%

We are wellahead of where

we were this timelast year

We are back topre-Covid levels

3 months 6 months 12 months More than a year

How long do believe it will take your business to recover to pre Covid-19 levels?

NOV OCT

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JobKeeper – a concern for 2021

23% 30% 36%0%

20%40%60%80%

100%

NOV OCT SEPT

Are you accessing JobKeeper for yourself and/or your staff?

Yes No

0%

10%

20%

30%

40%

50%

60%

It will have a major impact on ourbusiness

It will have a moderate impact on ourbusiness

It won't make any difference Other

When JobKeeper ends in March 2021, what impact do you believe it will have on your business?

SEPT OCT NOV

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Access to finance

13% 14% 16%

60% 58% 59%

27% 28% 25%

0%

10%

20%

30%

40%

50%

60%

70%

SEPT OCT NOV

Compared to two months ago, do you think it is currently...

Easier to access finance About the same to access finance More difficult to access finance

• Not many SMBs are actively applying for finance. During the quarter, only 16% applied in September, 13% in October and 11% in November

• Of those who applied, 65% were successful in September, 61% in October and 71% in November

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Access to finance

16%

10%

15%

3%

7%

1%

22%

20%

6%

15%

10%

17%

3%

7%

1%

25%

18%

5%

17%

9%

18%

3%

7%

0%

23%

17%

6%

0%

5%

10%

15%

20%

25%

Credit card Overdraft Bank loan Equity capitalraising

Buy Now PayLater

(Afterpay/ZIP)

Other Personal savings None Government loan

If you need to access finance in the next 3 months, which of these would you consider?

NOV OCT SEPT

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Access to finance

• During November SMBs around the country saw the Covid-brakes coming off accounts departments.

• Victorian businesses reported above average times to pay (25%) but also was the only state reporting that they were being paid faster than the national average (19%). ACT SMBs also reported that time to being paid had stretched out (24%).

19% 20% 24%

15% 11%

16%

66% 69%60%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

NOV OCT SEPT

Compared to the same time last year, has the time your customers are taking to pay invoices

changed?

Increased Decreased Stayed the same

Confidence in the economy

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SMBs confidence in the economy increasing

0%

10%20%

30%40%

50%

SEPT OCT NOV

Thinking about the nation’s economy overall. In a year from now do you think the nation’s economy will be better, worse or about the same?

Sept – Nov 2020, n=2,019

Worse Same Better

34%22%

34% 30%16% 17%

27%

33%35%

35%27% 46% 48% 36%

33%44%

31%43% 38% 35% 36%

0%10%20%30%40%50%60%70%80%90%

100%

VIC NSW QLD SA Tas WA ACT

Thinking about your State/Territory's economy overall. In a year from now do you think it will be better, worse or about the same?

Nov 2020 n=1,005

Worse Same Better

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SMB attitudes to Governments

17%

19%

49%

13%

22%

54%

13%

21%

53%

0% 10% 20% 30% 40% 50% 60%

Work against small business

No impact

Supportive of small business

Overall, do you believe that the Federal Government’s current policies are supportive of small business in general?

NOV OCT SEPT

24%

16%21% 19%

6% 8%

20% 23% 22% 19%24%

20%

42%

50%

42%

50%

60% 57%

0%

10%

20%

30%

40%

50%

60%

70%

VIC NSW QLD SA TAS WA

Do you believe that your State Government’s policies are supportive of small business?

Work against small business No impact Supportive of small business

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Approval ratings – what do SMB owners think of the leaders?

Dan Andrews (VIC) Approve DisapproveOct 66% 34%Nov 61% 39%

Gladys Berejiklian (NSW) Approve DisapproveOct 77% 23%Nov 76% 24%

Anastasia Palaszczuk (QLD) Approve DisapproveOct 62% 38%Nov 65% 35%

Steven Marshall (SA) Approve DisapproveOct 79% 21%Nov 72% 28%

Peter Gutwein (TAS) Approve DisapproveOct 84% 16%Nov 85% 15%

Mark McGowan (WA) Approve DisapproveOct 93% 7%Nov 91% 9%

Andrew Barr (ACT) Approve DisapproveOct 64% 36%Nov 61% 39%

Michael Gunner (NT) Approve DisapproveOct 50% 50%Nov 56% 44%

Scott Morrison No changeApprove 72%Disapprove 28%

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Voting intentions

38%

6%

28%

4% 5% 4%2%

12%

43%

3%

28%

5%4% 4%

1%

11%

42%

5%

25%

5% 5% 4%1%

13%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Liberal Nationals Labor Greens One Nation An Independent Another minor party Can't say

If a Federal election was held tomorrow and thinking about the prospects for your business, who are you most likely to support?

SEPT OCT NOV

Sensis Business IndexAbout the survey

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About the surveyBreakdown of small and medium businesses surveyed n=2,019

0% 5% 10% 15% 20%

Construction/BuildingWholesale

Retail TradeManufacturing

Transport/StorageCommunication, Property and…

Finance and InsuranceHealth and Community Services

Accommodation, Cafes and…Cultural and Recreational and Other…

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

Melbourn

e

Region

al VIC

Sydne

y

Region

al NSW

Brisba

ne

Region

al QLD

Adelaid

e

Region

al SAHob

art

Region

al TAS

Perth

Region

al WA

Canbe

rra

Region

al ACT

Darwin

Region

al NT

22%

10%

15%14%

15%

14%

10%

1 to 2 employees

3 to 4 employees

5 to 9 employees

10 to 19 employees

20 to 49 employees

50 to 99 employees

100 to 200 employees

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About the survey

52.0%47.7%

0.3%

Male Female Other

30 years old or under

31 to 40 years old

41 to 45 years old

46 to 50 years old

51 to 60 years old

Over 60 years old

0% 5% 10% 15% 20% 25%

Under $10,000

$10,000 to $30,000

$31,000 to $50,000

$51,000 to $100,000

$101,000 to $500,000

$501,000 to $1 million

$1.1 million to $2 million

$2.1 million to $6 million

$6.1 million to $10 million

$10.1 million to $20 million

Over $20 million

Don’t know / Can't say

What is the approximate annual revenue of your business?

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Full access to the Sensis SMB Business Index data is available. Access includes full data analysis, state and industry based filtering.

For details, please contact Will Clarke, Head of Corporate Communicationson 0488 34 54 64 or will.clarke@sensis.com.au

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The material contained in this publication is general only and is not intended as advice on any particular matter. No reader should act or fail to act on the basis of this report. Sensis Pty Ltd disclaims to the maximum extent permitted by law all liability,

costs and expenses incurred by any person in conjunction with the content of this report.