The latest small businesses report by leading SME non-bank lender ScotPac, shows that Omicron has further exacerbated staff and compliance worries for SMEs.
ScotPac’s SME Growth Index is Australia’s longest-running in-depth research on small business growth prospects, polling a representative sample of 1255 small businesses.
Omicron caused headaches for SMEs
From compliance issues to staff shortages, the SME sector was already facing significant challenges from the start of 2022, even before the current Covid-related stresses.
Craig Michie, ScotPac senior executive, said staff worries had been drastically increased by the pandemic, with the twice-yearly ScotPac research recording a fourfold increase in staff issues since 2018.
The latest virus wave has led SME owners to identify being short-staffed as a serious concern.
Mr Michie said, “Staff issues were nominated as a key concern by almost half of business owners (49 per cent ), compared to three years ago when significantly fewer (12 per cent) called it their top concern.
“Anecdotally since 2022 began, 8 in every 10 of the SMEs we fund are telling us they are struggling to keep existing staff on the job and to find new staff to ensure their businesses operate each day.”
SME Growth Index research polling of more than 1200 SMEs indicated eight in every 10 Australian business owners are most worried by compliance, cash flow and finding enough time in the day to complete tasks.
Mr Michie continued: “Business owners have so much on their plates right now, and staff issues driven by Omicron are just one extra burden on top of their usual burdens.
“We are trying harder than ever to respond quickly, be a flexible funding partner that understands their short-term needs and challenges, working with SMEs to help them through this latest hurdle so they can get back to growth once recovery is underway.”
Top three concerns for SMEs
The most recent SME Growth Index found three stresses have by far the biggest impact – compliance, managing cash flow and having enough time in the day to get the job done.
Additionally, the report found the number of businesses owners with customer concerns has more than doubled from its 2018 rate. A staggering two-thirds of business owners (65 per cent) are now concerned about customer issues.
SMEs owners identified compliance as a major issue. The report showed that meeting government compliance was causing stress to most businesses.
“The top concern, perhaps due to navigating government grants, stimulus measures and other initiatives during the pandemic, has been meeting government compliance. This was named by 85 per cent of SME owners,” Mr Michie said.
“In 2018, only 10 per cent of SMEs cited government compliance requirements as a pressing concern so this issue has really surged for small business owners.”
Finding time to fit it all and managing cash flow were identified as the subsequent greatest stressors in ScotPac’s report.
Mr Michie said, “The second biggest concern identified this round was SME owners having enough time to complete tasks, a worrying factor for 84 per cent of businesses.
“Rounding out the top three issues was cashflow concern, nominated by 81.5 per cent of SMEs.
“Getting access to funds is vital for strong cashflow, which is why ScotPac created its $100m SME Bounce Back Fund which allows business owners to access up to $1m capital with the first three months interest-free.”
Other significant concerns highlighted by SME owners in this round of reporting are the impost of new taxation measures (44 per cent ) and supply chain disruptions (27 per cent) – this was a growing cause for concern for SMEs even before the latest supply chain issues caused by the rapidly rising number of COVID cases across Australia.
Impact of the pandemic on SME sector
Considering ScotPac’s research was undertaken before the Omicron variant took hold across Australia, Mr Michie said a minority of SMEs, although a not insignificant minority, named closed borders and lockdowns (34 per cent) and pandemic recovery (27 per cent) as their biggest worry.
He said, “These pandemic-specific responses were well down the priority list, behind the perennial issues that plague small business owners – red tape, long hours and cash flow.”
Just under half of SMEs (42.5 per cent) reported being stressed about sudden business model disruption. This is significantly up from the 26 per cent concerned about disruption pre-pandemic.
Mr Michie said trusted advisors such as accountants, brokers and bookkeepers should be alert to these SME concerns and be assisting their small business clients with information or advice around ways to solve these issues.
He said, “Whether it is restructuring the business, looking into mergers/acquisitions or finding new and smarter ways to fund the enterprise, there are many ways for SME owners and their advisors to alleviate the common pain points so many are enduring.”
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