About the study
Money commissioned a survey of an independent panel of 261 Australian business owners. The survey sought to understand whether the length of time a business has operated impacts their level of financial security. The survey also uncovered businesses’ ability to forecast profits, whether they still experience cash flow issues, and whether they still see ups and downs in revenue.
Money.com.au surveyed business owners across a range of organisational sizes: micro-businesses (1-10 employees), SMEs (11-50 employees), medium (51-200 employees) and large (more than 200 employees). Respondents also represented various lengths of time their businesses have operated: young businesses (less than five years in operation) and established (more than five years).
Does business financial security really grow with time?
The survey reveals that 61% of established business owners that have been operating for at least five years are at a stage where they are able to pay themselves comfortably. This is slightly more than the 56% of owners of businesses younger than five years old who said the same.
Which states have a higher proportion of comfortably paid business owners?
Across the states, a higher proportion of business owners in Western Australia (72%) pay themselves comfortably, compared with 54% of SA business owners and an equal 57% of those based in NSW and the ACT.
Are business owners paying themselves similar salaries to CEOs of the same-sized business?
Among business owners overall, more than half (51%) said they are not paying themselves similar to a CEO of the same-sized company, while almost a third (30%) are unsure if their salary is similar.
The fairly equal proportion of owners of established and young businesses are not paying themselves similar salaries to their counterparts: 59% of established business owners admitting this compared with 53% of owners of young businesses.
Across the states, a higher proportion (71%) of ACT business owners said they do not pay themselves a similar salary to CEOs of the same-sized company, compared with 49% of those in NSW, and 43% in Victoria.
How much profit do Australian businesses make?
The survey revealed that one quarter (26%) of Australian businesses make 5-10% profit on revenue, while 22% make 10-20% profit on revenue. An equal 15% make less than 5% profit on revenue.
What do business profits look like at different stages of operation?
Twice the amount of established businesses make significant profits: 20% make more than 30% profit on revenue, compared with 10% of young businesses who make the same level of profit. Of concern, just over a quarter (29%) of ACT businesses make no profit, compared with an equal 13% of WA and NSW businesses, and just 10% of those in Victoria.
Are businesses experiencing cash flow issues?
The survey found that 49% of businesses in the survey do not have cash flow issues. However, more than half (51%) of business owners admit they experience minor or serious cash flow issues.
A higher proportion of established businesses do not experience cash flow issues, with more than half (53%) of established business owners citing this. In contrast, two-thirds (64%) of young businesses admit they experience cash flow issues. 14% say the issue is serious.
The survey also found that the larger the business, the more likely they are to avoid cash flow issues. This is true for more than half (55%) of large businesses, compared with 47% of medium-sized business, and 44% of small businesses.
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Across the states, a higher proportion (71%) of ACT businesses do not experience cash flow issues, compared with 51% of Victorian businesses, and 46% of NSW businesses.
Can business owners project the next 12 months of profits accurately?
The survey found that just 58% of business owners overall said they can forecast profits over the next 12 months with reasonable accuracy.
Established and young businesses are on an even playing field when it comes to their ability to project profits: 58% of established businesses and 49% of young businesses can forecast their profits over the next 12 months with reasonable accuracy.
Across the states, a higher proportion of Queensland business owners (66%) and WA business owners (63%) can forecast profits with reasonable accuracy. This compares with 49% of those in NSW and 43% in the ACT.
Do businesses experience significant ups and downs in revenue?
Respondents were also asked if their business is still experiencing significant ups and downs in revenue, and whether revenue differs significantly between months, quarters or years. Nearly a third (31%) said they experience significant ups and downs in revenue between quarters, while 26% of business owners admit their revenue differs significantly between months.
A similar proportion of owners of established and young businesses said they experience significant ups and downs in revenue: 35% of established businesses and 34% of young businesses.
The smaller the business, the more likely revenue differs significantly between quarters. For instance, 41% of small business owners admit their revenue differs significantly between quarters, compared with 28% of medium business owners and 19% of large business owners.
Across the states, 71% of ACT business owners are not experiencing ups and downs in revenue, compared with 55% of South Australian business owners, 41% of those in NSW, and 36% of Victorians.
