Private companies ready for growth

Australian private companies are readying for business expansion in a marked contrast from the sentiment seen at the same time last year, according to KPMG’s annual Private Companies Survey.

Three quarters of respondents were preparing to expand, whereas last year 30 per cent were preparing to downsize operations. 70 per cent believed the economy was in recovery and appeared positive about the mid-term economic outlook, compared to just 2 per cent in the previous survey.

Although the survey was conducted in April, prior to the testing conditions experienced throughout May, it still goes to show that Australian private companies are able to steer their way through tough times, according to head of KPMG’s Private Enterprise Marco Di Sebastiano.

“Australian private companies have survived the financial crisis because they adopt a more conservative approach to business planning,” he said. “They focus on the longer term and stay within the bounds of their core business.”

This enabled them to remain resilient through tough times, such as the current economic uncertainty in Europe, Di Sebastiano said.

There had been an increase in defaults despite banks continuing to see the segment as a growth area, and interestingly only one in four within the sector was looking for funding which highlighted their self sufficiency, he said.

Half of respondents had increased staffing levels over the past six months, and two thirds anticipated recruiting over the next year. Two thirds also claim to have suffered hiring constraints such as talent shortages, and 40 per cent were looking overseas for new talent.

Almost half of those surveyed credited their business strategy for the growth seen throughout the downturn, and almost all said they were moderately or well prepared to respond to challenges in the Australian economy in the coming year.

“It’s pleasing to see the positive outlook, but my concern is that many businesses may be reading too much into the rebound,” said Di Sebastiano. “Now more than ever they must plan well, with a particular focus on funding and staffing, in order to position themselves as the economy recovers.”