The SME sector is showing significant improvements in economic sentiment and business conditions, according to a new MYOB report.

The March 2014 MYOB Business Monitor Report reveals a rising proportion of SMEs reporting annual revenue growth when compared with recent years, reaching a level unseen since March 2011. The report also shows a declining proportion reporting a fall in revenue.

Although less than one quarter reported rising revenue when asked to look back over the year to February 2014, this was an improvement on the previous five consecutive surveys.

One third reported a revenue decline, however, this too was the best result reported since March 2011. The report also found a significant increase in the proportion of SMEs anticipating a revenue rise in the next 12 months (34 per cent, up from 25 per cent in the prior report). More than 20 per cent expected revenue to fall (on par with the prior report).

Tim Reed, CEO of MYOB, said the results told a positive story.

“Buoyed by record low interest rates and a lower Australian dollar, local SMEs’ hard work  and resilience is now bearing fruit.  I’m delighted to see more than one in five reporting increased revenue and  an even higher proportion, one in three, expecting a better year ahead,” Reed said.

In terms of performance by industry, those in finance and insurance were again the most likely to see a revenue rise, followed by agriculture, forestry, and fishing. Operators in construction and trades were hit hardest, experiencing a revenue fall, closely followed by operators in manufacturing and wholesale.

The industry most likely to expect revenue gain was finance and insurance, at 64 per cent – well ahead of the other  industries.

South Australia and Victoria were most likely to see revenue rise followed by Queensland, while New South Wales was the most likely to see revenue fall.

The state most likely to expect revenue gain was Victoria, followed by South Australia.

One third (33 per cent) of the SMEs surveyed reported more work/sales in their pipeline for the next three months  than anticipated. Around 45 per cent reported an expected pipeline, and 21 per cent saw less work than expected. This was an  improvement on the September 2013 report, at 28 per cent, 43 per cent, and 27 per cent respectively.

In terms of intended investment of time and/or money across various business elements, the areas most likely to see an increase in focus over the next 12 months were:

1. Customer retention strategies – 30 per cent

2. Customer acquisition strategies – 26 per cent

3. The number or variety of products or services offered by the business – 26 per cent

4. Prices and margins on the products or services sold – 26 per cent

5. Sale of products/services online / offline – 22 per cent

The top three priorities have been relatively consistent since the question was first asked in October 2011.  Further down the list, the intent to increase investment in the amount paid to employees dropped two spots  to seventh, as sales of products/services online rose to equal fifth with offline sales of products/services.