Business services
The business services sector covers accountants, administrative services, advertisers, architects, consultants, employment services, engineers, lawyers, market researchers, pest controllers, scientific and technical services, and travel agents.
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Of the 851 private businesses we surveyed for the PwC Private Business Barometer, 85 (10 per cent) were from the business services sector. |  |
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Business growthStrong sales growth across the sectorAverage sales growth across the business services sector was 12 per cent, which was the same as this sector recorded in the last PwC Private Business Barometer. This steady growth bucked the trend of other industries, which saw slower sales growth in this survey than in the previous one. The stand-out result was 16 per cent sales growth for services businesses in Western Australia. This sector has the greatest direct exposure to the mining boom and the benefits flow into business services before trickling down to the rest of the economy. | |
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Ambitious growth targetsServices firms predict a strong year of growth ahead, with an 18 per cent boost in sales and a 16 per cent increase in profits. As we have seen with previous results, these forecasts may be optimistic. Business services companies in Victoria and Western Australia were expecting a bumper year ahead, setting themselves ambitious sales growth targets of more than 20 per cent. | |
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Merger and acquisition transactions aheadOrganic growth appears to be the main driver for growth for companies in the business services sector over the short and medium terms. Services firms show a much stronger preference for mergers and acquisitions than companies in other business sectors, with 28 per cent expecting to acquire another firm in the next year and 36 per cent planning to do so in the next three years. | ||
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PeopleCompanies looking to take on staffThe high level of optimism in the business services sector is reflected in their strong intention to hire new staff in the next six months. Almost three-quarters (74 per cent) of business services companies told us they were planning to hire new staff. This result is down two percentage points from the previous PwC Private Business Barometer. Victorian services companies were most likely to hire (80 per cent signified their intentions to take on new staff) and Western Australian companies were the least likely (33 per cent said they would not hire or were not sure). | |
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Skills shortages the main concernBusinesses cited lack of talent as their greatest impediment to hiring new staff – 45 per cent of services firms said this was a problem. The skills shortage was most notable in South Australia, where 75 per cent of businesses surveyed worried about finding qualified staff; and in Western Australia, where a lack of job skills was a problem for 56 per cent of respondents. | |
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FundingBanks back in favour as funding sourceJust over one-third (34 per cent) of business services companies told us they planned to make a major investment in the next year. This figure was slightly lower in Victoria (32 per cent). Bank funding was the most popular source, nominated by 16 per cent of services firms, followed by internally generated funds (seven per cent). This may indicate banks are starting to lend money again after a lengthy credit squeeze. Interestingly, companies in New South Wales and Victoria listed private equity and venture capital as their second most popular source of funding, which may indicate an upswing in private equity activity. | |
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Business operationsQuality staff are key to business successGiven business services firms live or die on the quality of their staff, it is not surprising the availability of people is the major challenge for this sector. Overall, 74 per cent of business services companies reported one or more people issues as their biggest challenge. These were closely followed by funding issues (72 per cent), which were the primary concern for services firms in New South Wales and Victoria. | |
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