The 2024 Small Business Perspectives Report has painted a bleak picture of the Australian small business landscape.
Struggling with soaring costs, labor shortages, and a complex regulatory environment, many businesses are teetering on the brink.
he Council of Small Business Organisations Australia (COSBOA), in collaboration with CommBank, has released the 2024 Small Business Perspectives Report, highlighting the key challenges facing Australia’s small business sector. The report covers issues such as the rising cost of doing business, workforce shortages, the energy transition, cybersecurity, artificial intelligence, industrial relations, and government procurement.
Key findings
The report reveals the following major challenges for small businesses:
- Rising Costs: Small businesses are struggling with increasing expenses, including energy, rent, insurance, and interest rates, along with complex changes in industrial relations.
- Workforce Shortages: A critical shortage of both skilled and unskilled workers is hampering business growth and strategic development.
- Energy Transition: Nearly half of small businesses have not yet started their energy transition due to financial constraints and a lack of knowledge.
- Cybersecurity Threats: Small businesses are frequent targets of cyberattacks, with cybercriminals becoming increasingly sophisticated.
COSBOA CEO Luke Achterstraat emphasized the growing pressures on small businesses, stating, “Australian small businesses are at the heart of every community, employing over 5 million people. Yet, many are struggling to keep up with rising costs and regulatory changes.”
Rebecca Warren, CommBank’s Executive General Manager of Small Business Banking, also noted the economic and social importance of small businesses, which make up a significant part of Australia’s fabric. However, they are facing hurdles including high inflation, workforce shortages, and the need for greater investment in technology and cybersecurity. Small businesses are facing a severe cash flow crunch, driven by escalating costs in essential areas. A CommBank study found that over half of small- and medium-sized business owners reported mental health impacts due to economic pressures in the past year. Additionally, 57% of business owners are experiencing high stress, with some unable to pay themselves or relying on personal savings to stay afloat.
Achterstraat explained, “COSBOA has proposed policy interventions to ease business costs, targeting areas like energy prices, rental costs, insurance premiums, and regulatory burdens.”
Workforce and Training Issues
Workforce shortages are a significant challenge for small businesses, with a third of all occupations nationwide experiencing shortages. Skilled workers, especially in trades and technical roles, are in short supply, limiting business development.
COSBOA is calling for a national strategy that includes targeted migration policies and enhanced support systems for small businesses. The report highlights that 50% of small businesses have not yet begun transitioning to greener energy, largely due to financial and informational barriers. Achterstraat pointed out that while some businesses are adopting solar panels and energy efficiency measures, many struggle with funding and understanding what the transition entails.
Artificial intelligence is another area of concern, with many business owners feeling uncertain about the rapid pace of AI advancements. COSBOA is advocating for clear guidelines and support to help small businesses leverage AI safely and effectively. Small business owners are also grappling with changes in industrial relations, particularly in areas like casual employment and contractor management. Many report difficulty navigating new legal requirements and worry about the financial implications.
On the issue of government procurement, the report reveals that despite accounting for nearly all businesses in Australia, small businesses often miss out on Commonwealth contracts. COSBOA is urging the government to simplify the tendering process to give small businesses a fairer chance.
Call to Action
COSBOA’s Achterstraat concluded by urging policymakers to take action, particularly as Australia approaches a federal election. “If we don’t implement better policies to support small businesses, we’ll see less competition and higher prices. This report should serve as a wake-up call to politicians who want to support their communities and address the cost of living.”
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