Funding
 | “We will be looking at a couple of major projects over the next 12 months, all of which will require an investment. We will fund these investments from our working capital, which has been our strategy in the past.” | |
| “Dial An Angel has recently invested in a major IT infrastructure database. We are also looking at renovating our Sydney office over the next 12 to 24 months, which is part of our strategic plan to merge our two Sydney sites. We will require some funding in the short to medium term and will look to the bank to secure this. We have a great relationship with our bank.” | |
| “We will start to grow our store numbers over the coming year. The first store will be funded through working capital and future stores using cash reserves. Our expansion plans are timed to coincide with an upswing in the economic climate, which we believe we will start to see within the next 12 to 18 months.” |
Private businesses cautious on investments
| Most private businesses are not considering significant investments in the near term. Only 36 per cent had plans to make significant investments within the next 12 months. Businesses in South Australia seemed more inclined to invest than their counterparts in other states. These results have remained largely static since March 2010, indicating businesses continue to be cautious. | |
Banks in favour as economy recovers
| Businesses planning a major investment in the next year were much more likely to seek funds from banks than from internal or other sources. Bank funding has remained the most popular source of cash for investments since March 2010, when private businesses started to recover in earnest from the global financial crisis and economic downturn. These findings lend weight to the view that businesses are seriously looking again at how to achieve growth. |
Difficulties finding access to capital and credit – for some
| Half (49 per cent) of private businesses said they had not encountered any recent or long-term difficulties in raising funds. However, the PwC Private Business Barometer revealed many businesses were finding it hard to access credit and equity capital. One in eight businesses (13 per cent) said they could not get any credit. Another 10 per cent of respondents had trouble finding the equity required for funding and a further 10 per cent felt they could not meet the cost of debt capital. |
Private businesses increase borrowings
| Private businesses estimated their borrowings added up to 21 per cent of total assets, up from 17 per cent in the October 2010 edition. This reverses a long-term downward trend, accelerated during the global financial crisis as businesses paid down debt and reined in expansion plans. It also reinforces that business activity is starting to pick up as owners and senior executives regain confidence in the market. | | Of those businesses that provided a debt ratio, 21 per cent reported no borrowings and only 1 per cent reported a ratio of 100 per cent or higher. The retail trade sector had the highest average debt ratio at 27 per cent, while business services firms had the lowest. Businesses in Western Australia had the lowest ratio at 18 per cent, while their South Australian counterparts had the highest at 24 per cent. |
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