Challenges Facing Small Business Owners

With inflation reaching unprecedented levels, numerous business owners are grappling with uncertainty about what lies ahead. To assist you, we’ve compiled a snapshot of challenges facing small Aussie businesses to help you prepare for the Christmas season and beyond.

Rising Wages: 

SMEs, especially those under $5 million in revenue, are grappling with the pressure of increasing wages, affecting over 60% of owners, according to the latest ScotPac SME Growth Index.

Higher Interest Rates: 

ScotPac’s SME Growth Index also shows that 40% of SMEs are feeling the pinch, multiple interest rate hikes impact funding costs, notably affecting businesses with variable-rate loans.

Cash Flow Issues: 

According to Xero’s survey, a whopping 60% of businesses faced cash flow challenges this year, leading to personal savings being used by over a quarter of them.

Customer Retention: 

Studies have shown that acquiring new customers costs more than retaining old ones. Customer loyalty reduces the effort needed to maintain them, emphasising the importance of understanding and meeting customer needs.

Inflation Impact: 

Small business owners are deeply concerned about rising supply costs, estimating an increase of over 10% in just one year, according to the Zeller Small Business Resilience Report.

Cybersecurity Vulnerability: 

Limited resources make SMEs susceptible to cyber threats, with nearly half spending less than $500 on cybersecurity annually, according to the Australian Cyber Security Centre.

Weak Consumer Sentiment: 

The Westpac-Melbourne Institute Consumer Sentiment Index rose 2.9% to 82 in October, up from 79.7 in September, but still remains very low and in deeply pessimistic territory because of still-high inflation and renewed rate rise concerns

Gloomy Outlook:

According to the Turnaround survey, over 90% of management professionals foresee a potential recession in Australia within the next two years, with 70% believing it’s likely within the next 12 months.

The challenges above, combined with global economic and political instability, create a perfect storm for SMEs, making planning difficult. 

It can be challenging to navigate this maze of uncertainty, so SMEs need to stay adaptable, exploring strategies such as diversification, entering new markets, and embracing technology and innovation. If you would like to discuss your business options, please get in touch with us, and our property team will contact you shortly.

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