Small Business Loans Australia commissioned a survey of 253 Australian small-to-medium business owners and decision-makers to gauge how they would cope in a recession. Respondents were asked to specify how long their business could survive a recession, from less than six months to 18-24 months.
As central banks across the world try to lower inflation without creating a recession, SMEs were also asked to indicate whether the impacts of a recession or continually rising inflation would be worse for their business.
The survey was sent to businesses across different organisational sizes from micro (one to 10 employees), to small (11-50 employees) and medium (51-200 employees).
Respondents were asked to identify if their business would survive a recession and for how long.
Alarmingly, 34 per cent of respondents revealed they could only survive less than six months of a recession.
More than a third (39 per cent) could survive 18-24 months of a recession and just over a quarter (28% per cent) said they could survive six to 12 months of a recession.
Fourteen per cent said their business could not survive a recession at all, however short.
Businesses were also asked if Australia experiences a recession as a result of reduced spending do they think their businesses would make it through to the other side.
Victorian and NSW businesses, which underwent long periods of lockdowns and restrictions, thought they were more likely to survive six to 24 months of a recession.
Respondents were also asked to choose whether a recession or rising inflation would be more difficult for their business to survive.
More than half (55 per cent) of businesses revealed a recession would pose a greater challenge for their business, while 45 per cent said continually rising inflation would be worse, suggesting both factors will have similarly negative impacts on Australian SMEs.
Continually rising inflation would be worse for larger businesses: 49 per cent of medium businesses chose this response, compared with 42 per cent of small and micro businesses.
