Rising business costs, workforce shortages, and green energy transition concerns are some of the pressing concerns facing small businesses today, according to a new report by the Council of Small Business Organisations Australia (COSBOA) and CommBank.
The 2024 Small Business Perspectives Report noted that Australian small businesses are grappling with increasing costs in energy, rent, insurance, interest rates, and complex industrial relations changes. As a result, 52 per cent of SME owners and managers experienced mental health issues in the last 12 months, while 57 per cent of business owners report high or very high stress due to financial strains. Furthermore, nearly one in three are unable to pay themselves and 25 per cent are using personal savings to keep their businesses afloat.
“It’s been a perfect storm: high inflation, rising interest rates, chronic labour shortages, industrial relations changes and high material costs,” commented Denita Wawn, CEO of Master Builders Australia.
Meanwhile, the report also highlighted a critical shortage of both skilled and unskilled workers, hampering business growth and strategic development. Analysis showed that more than one-third of occupations nationwide are experiencing shortages, with 50 per cent of technician and trade worker groups particularly affected.
“The difficulty of recruiting employees with the necessary technical skills impacts our chance of developing competitive products to export. It means small business owners feel like we’re just treading water, instead of reaching our business goals,” said Dominic Schipano, National Executive Officer, Centre for Information and Communications Technology (CITT).
On the green energy front, half of small businesses have yet to embark on an energy transition as they are hindered by huge financial barriers and a lack of knowledge. 63 per cent said that it will be difficult to fund the transition to renewable energy, and 36 per cent reported low knowledge about what is required.
Luke Achterstraat, CEO of COSBOA, said that the report illustrates the colossal pressure facing small businesses. He said, “Australian small businesses are the heart of every community, employing more than 5 million people. Yet, they are struggling to manage spiralling business costs. Small business needs a future of stability, growth, and success for the benefit of every Australian. Small businesses have been hard hit over the past year, with nearly half not breaking even. Owners are doing their best to keep their heads above water, but this is not an easy task in a sea of economic and regulatory uncertainty.”
Rebecca Warren, Executive General Manager of Small Business Banking, CommBank, also highlighted the critical role of Australian small businesses in the economy, as well as in society saying, “Small businesses play a critical role not only in Australia’s economy but in what makes our country so special. It’s the family-owned cafes and sandwich shops, the bakeries and dry cleaners that make up the social fabric of our country and serve as the glue of our everyday experience.”
Achterstraat added, “The reality is this is the toughest operating environment in recent memory for small businesses. These are enterprises funded by a mum-and-dad with a mortgage, not institutional shareholders or superannuation funds. If we do not better policies to support the engine room of the economy, we will have less small business, reduced competition and be stuck with higher prices for longer.
“With an election looming, we will continue to advocate for targeted policies that will alleviate business costs, bolster small business sustainability and contribute to the thriving economy where both businesses and consumers benefit. This report should be a wake-up call to policymakers and politicians who seek to support their communities and address the cost of living for their constituents,” he concluded.
