positive momentum builds as SMEs eye growth in 2025

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SMEs have shown resilience as they transition from a challenging 2024 to a more optimistic outlook for 2025. Despite ongoing cost pressures, 38% of SMEs are prioritising growth in the coming year, aligning with levels seen last December and surpassing other months in 2024.

improved revenue and profitability

Revenue and profitability trends have improved, with 28% of SMEs reporting higher revenues compared to 12 months ago and 58% achieving positive earnings.

global & economic confidence remains low

However, confidence in the Australian and global economies for the next three months remain subdued, reflecting continued caution amidst economic uncertainty.

SMEs navigate financial strain

In December, financial challenges for SMEs slightly eased, with many key issues affecting financial health declining compared to the previous month.

Cost pressures remain a significant challenge, but SMEs are responding by streamlining product offerings, discontinuing unprofitable services, and refreshing their customer value propositions.

debt management

Debt management has improved, with the proportion of SMEs carrying no outstanding debt rising from 30% in August to 37% in December. However, the share of SMEs unable to meet debt obligations in the next six months has also increased to 12%.

finance

Demand for finance has shifted, with funding for growth in new markets, trade finance, and M&A activities declining, while domestic growth remains a priority.

After navigating a challenging year, SMEs are entering 2025 with renewed optimism and determination with rising revenues, profit and growth expectations boosting confidence. While obstacles and economic uncertainty remain, SMEs are well-positioned to enjoy a more prosperous year ahead.

Please click on this link to access the full report including subgroup analysis by industry sector, size of business and state. Fifth Quadrant and Ovation Research publish monthly updates of this research here. For any questions or inquiries, feel free to contact us here.

SMEs remain resilient