The State Of Small Business In 2017

If you own your own business or are thinking of starting one, then you need to know about the latest trends for small business banking in 2017.

Small business is the backbone of the Australian economy; as we reported in June, small to medium enterprises (SMEs) now contribute 57% of Australia’s GDP. These small businesses are responsible for the creation of almost 7 million jobs Australia-wide!

As a part of Canstar’s 2017 Small Business Award research, we have identified the following trends that are of particular interest to small business owners:

  • Small business confidence is low but higher than last year
  • Young people are driving small business
  • Smart ATMs are becoming more popular for business use
  • RewardPay lets you earn points on business payments with American Express

Small business confidence unaffected by Federal Budget but has improved since 2016

As we reported in June, this year’s Federal Budget had little impact on SME confidence across the board – but SME performance has improved somewhat over the past few years, according to the latest report from Westpac.

Despite that fact that several measures were taken in the Budget to address small and medium businesses, Westpac’s index for the economic and financial well-being of SMEs found that:

  • Confidence in June was down 2.3% since March 2017
  • This is still a 17% improvement from 12 months ago
  • Most SMEs (62%) expect that the budget will not impact their business performance

At the moment, the slight downward movement in SME confidence is not a bad thing, as confidence is still significantly higher than it was 12 months ago. According to NAB, now is a good time to be a small- to medium-sized business owner. NAB’s whitepaper report found that:

  • 1 in 10 SMEs are actively growing their business
  • Half aim to expand in the next 3 years
  • A third have invested in winning new customers

For a more detailed look at small business confidence at the moment, read our article on the matter. Based on this information, it appears that now might be a suitable time to launch that business idea you’ve been dreaming of!

Take a look at our comparison table snapshot below, or try out these comparison tables for yourself here. Please note that this table has been formulated based on the loan being secured by residential property, for a loan of $250,000 in NSW, and is sorted by our star rating (highest to lowest).

Young people are driving small businesses

According to NAB’s data, people aged 30 and under in 2017 – a.k.a. Millennials – are now the largest group in the workforce, and the majority of SMEs (56%) are now run by Gen X or Millennials.

The use of the internet and mobile expenses management systems are vital to get ahead in today’s environment, and it is young people who have been the fastest adopters of this technology, so it comes as no surprise that they’ve been able to succeed.

63% of businesses surveyed admitted that they would not have survived without the advantages provided by the internet, and a quarter of all Millennial-run businesses are online only.

For businesses with young employees, take heed; they crave mobility combined fast, efficient results. Businesses must adopt these technologies to keep Millennials engaged in the workplace, and this trend is only going to become more and more significant in the years to come.

Interested in a business savings account? The table below shows business savings accounts available for online savings accounts with a balance of $50,000, sorted by star rating (highest to lowest)

Cyber security more important than ever

As businesses continue to move into the digital world, online security is of paramount importance. And as we approach tax return and BAS time, this becomes more important than ever, with the ATO seeing over 17,000 tax scams reported this year so far.

In fact, Scamwatch reports that nearly 6,000 Australian businesses were targeted by scammers in 2016, totalling $3.8 million in losses. The vast majority of these scammers contact individuals or businesses via phone or email.

Scamwatch recommends 3 key steps to take as a business:

  1. Always be suspicious of requests for payment sent to you by unofficial means. Have a clearly defined method of verifying and paying accounts and invoices to help with this.
  2. Ensure all company computers have a firewall, complete with strong anti-virus software.
  3. Consistently and regularly back up data from your computer onto separate hard-drives in the event that data on one network or device is compromised.

Make sure all employees are aware of these steps as well. You don’t want to end up like the Brisbane City Council; they were scammed 9 times last year, at a cost of $450,000!

Check out the below comparison table for a snapshot of the current rated commercially secured business overdrafts for a loan amount of $250,000 in NSW, sorted by our star rating.

Earn points with RewardPay

Launched just over a year ago, RewardPay can be used by business owners who want to pay their suppliers with their Amex business credit card. RewardPay allows you to make these payments, which would normally be made by a bank transfer, via card in order to earn rewards points.

This card charges a 2.4% fee plus GST for each payment, but this fee may be offset by some of the below benefits:

  • You can use it to improve your business’s cash flow
  • In addition to the usual 30-40 days to pay business expenses, using a credit card gives another 40-50 days interest-free on the payments
  • In some cases, the 2.4% plus GST fee may be tax deductible, depending on whether the ATO classes this as a business expense (ask your accountant for details)
  • You can earn Amex rewards points on the payments

The last point is the most unique benefit of this card. After last month’s credit card interchange fee changes, a lot of rewards cards no longer provide as many rewards points per spend as they did before. But while some bank-issued Amex credit cards have cut their points programs, credit cards issued directly by American Express remain earning a higher reward rate.

There are several Amex Business credit cards in particular that offer solid value with RewardPay, but one in particular that catches the eye is the Business Accelerator credit card, which earns up to 2 rewards points per $1 spent.

As things stand, American Express is currently the only credit card provider that uses RewardPay. For more information about RewardPay or the American Express line of business credit cards, compare Amex credit cards on the Canstar website and read the product disclosure statement (PDS) from Amex for any card you may consider.

This is not a product recommendation and we are not advising businesses to run out and get a rewards credit card. Rewards credit cards come with higher interest rates and higher annual fees, and it is important for business owners to recognise that not every business will be suited to using a rewards credit card. Not every business would spend enough per month to be able to earn a significant amount in rewards points.

Check out the below comparison table to view low rate AMEX business credit card rates currently on the market.

To keep your business up-to-date with the latest products for small businesses, business news, cash-flow tips, and more, be sure to visit our small business centre.

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