The Index also reveals more businesses are anticipating revenue growth (35 in Q1 FY15 up from 27 in Q4 FY14) and profit growth (27 in Q1 FY15 up from 16 in Q4 FY14) in the next six months.

The Commonwealth Bank Future Business Index1 is based on a detailed quantitative survey of financial decision-makers in Australian companies with turnover of $10-$100 million. The September quarter (Q1 FY15) Index recorded its smallest quarterly movement since it was launchedin 2011, declining by 0.2 from the June quarter (Q4 FY14) to 10.2.

Despite optimism around profit and revenue expectations, fewer businesses are well prepared for fluctuations in business conditions in the next six months, with only 38 per cent of businesses indicating that they are well prepared, down by seven percentage points over the last three months.

According to the Index, the primary opportunities for the mid-market over the next six months include new/expansion markets, new clients/business and increasing sales/demand. Businesses cited domestic competition and maintaining profitability/cash flow amongst the top challenges over the next six months.

Mid-market businesses are continuing to position themselves to take full advantage of emerging growth opportunities, said Michael Cant, Executive General Manager Corporate Financial Services, Commonwealth Bank.

"Half of the firms surveyed said they are focused on growth initiatives instead of cost management, which had been the focus in previous surveys. The Future Business Index also revealed that a significant number of the firms indicated they would be pursuing new markets and clients. This is more evidence that growth is factoring heavily into the business outlook," Mr Cant said.

"Despite business decision-makers expecting conditions and revenue to improve, they are still uncertain about competition and financial performance, citing 'maintaining profitability and cash flow' and 'margin squeeze' among their top challenges in the next six months."

Michael Blythe, Chief Economist, Commonwealth Bank, said, "We have seen an improvement in the harder-edged indicators relating to business conditions and revenue flowing through to improved risk appetite, capital spending plans and labour hiring intentions for the next six months.

"The significant improvement in the retail sector suggests that post-budget fears of softening consumer confidence were misguided. Most mid-market businesses still appear to be unfazed by fluctuations in the Australian dollar, as businesses have adjusted to the higher exchange rate in the past two years, which in itself is a considerable achievement."

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