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Risks & Opportunities for SMEs in 2010

2009 has been a roller coaster ride for many businesses.  While we are in better shape than this time last year, and opportunities are beginning to emerge, 2010 will continue to be challenging.   

SMEs have traditionally been a key driver of the Australian economy.  What will the key risks and opportunities be for SMEs in 2010?  

2010 will provide opportunities for well positioned SMEs.  It will also pose significant risks for those still struggling from the impact of the GFC.  

In our view, key issues in 2010 will be:  

  • Debt funding – Many SMEs have struggled to obtain or rollover debt funding with banks during the GFC.  The terms have generally been tough for those who have managed to do so.  In addition, alternative debt funders have largely disappeared.  While conditions are gradually improving SMEs looking for debt funding in 2010 will need to take a deep breath, be well prepared and allow a lot more time than usual to put it in place.  
  • Equity funding – For most of 2009 the stock market boomed.  In terms of capital raising, and there was a lot of it, the key beneficiaries were the large blue chips.  There are some positives here.  The improved stock market means it is becoming more attractive to float or raise capital from a valuation perspective.  In addition, confidence is gradually returning which will, over time, create more appetite for smaller company floats.  
  • Asset values – While asset values are improving, there will still be good opportunities in many sectors for SMEs that are well positioned to make acquisitions.  Ironically, for SMEs under pressure from lenders, improving asset values may well result in lenders pushing stressed SMEs over because they believe they will now be able to fully recover their debts.  Many insolvency practitioners are predicting another wave of insolvencies in the SME sector in the first half of 2010.  
  • Staff -  The softer employment market and more moderate employee expectations provide an opportunity for SMEs to recruit good quality staff.  However, it would be naïve to assume high levels of loyalty among staff retained during the GFC – employment agencies are predicting substantial movement as the economy improves.  

While 2010 will be less volatile than 2009 it will be tough and SMEs should expect the odd shock, most likely out of left field.   

The keys for successful SMEs in 2010 will be focus, measured risk taking and perseverance.  



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