Running a small business in Australia has never been easy, and right now, small business owners are facing an added challenge: a growing skills shortage.
From managing cash flow and keeping customers happy, to now dealing with the need for skilled workers, the pressure is mounting. The Small Business Skills and Training Needs Survey 2024, conducted by the Council of Small Business Organisations Australia (COSBOA), brings these issues to light, showing that many small businesses are struggling to meet their workforce needs.
A growing skills gap
The survey results show a concerning trend: 56% of small and medium-sized enterprises (SMEs) say they have a moderate skills gap, and 13% consider it an acute crisis. Even more concerning, 21% predict this problem will get worse in the next three to five years. Only 8% of SMEs feel fully prepared for the future. The survey covered a range of industries, including retail, healthcare, and construction, and found that businesses across these sectors are struggling with the same core issues.
When it comes to the most crucial skills, soft skills—like communication, time management, and leadership—top the list for 87% of business owners. Following closely are sales, marketing, and industry-specific skills, which are important to 78% of business owners. However, the problem is that many job applicants lack these skills, along with additional qualities like self-management and accountability. Many business owners feel they can’t find workers who meet their basic needs.
On top of this, hiring skilled workers has become even harder since the COVID-19 pandemic, with fewer skilled migrants coming to Australia. The Temporary Skills Migration Income Threshold has also made it more difficult to bring in overseas talent. This has made the hiring process a nightmare for many SMEs. Training staff to fill these skills gaps is equally difficult. Over 54% of SMEs say that training costs are just too high, and 64% say they can’t afford to take time away from the business to train employees. Many also point out that the available training programs are outdated or lack the flexibility that small businesses need. One business owner explained it simply: “Small businesses don’t have the luxury of big budgets for staff training—we need programs that provide real value for every dollar and minute spent.”
The tech challenge
The role of new technology in business is another issue. The rise of AI, modern machinery, and other digital tools means that businesses will need even more tech skills in the near future. According to the survey, 90% of SMEs say they will need these skills soon. Specifically, 28% need training in digital literacy, and 23% need to understand how to use new equipment. But the current training programs just aren’t cutting it—52% of SMEs say the available training is either outdated or irrelevant to their needs. One business owner pointed out that the emphasis on Bachelor’s degrees is often too expensive and doesn’t work well for mature workers looking to upskill. SMEs need practical, short-term training options instead of long university degrees.
When it comes to what they need most, financial support is at the top of the list. 86% of SMEs want training subsidies from the government, while others are asking for wage subsidies (48%), tax breaks (43%), and payroll tax exemptions (35%). Beyond money, flexibility is essential. 71% of business owners prefer a mix of on-the-job training combined with classroom learning, rather than rigid, one-size-fits-all programs. Apprenticeships, however, get a mixed response. Only 25% of SMEs rated apprenticeships as a positive experience, while 58% were neutral and 8% found them to be negative. Business owners highlighted that apprenticeships often offer limited pathways and are not always aligned with industry needs. One owner explained: “We need more certificate-level options and training that’s tailored to the needs of our specific industries.”
How SMEs can address these issues
The survey’s findings provide clear guidance for SMEs looking to improve their workforce skills and tackle the challenges ahead. Here are three key actions SMEs can take right now:
- The government offers several funding opportunities, including training grants and wage subsidies. Many SMEs are already accessing these resources through industry associations (45% of respondents), and it’s important for businesses to explore these options. A free training course or subsidized apprenticeship could make a huge difference in reducing costs and filling skills gaps.
- Many business owners are moving away from long, costly degrees and opting for micro-credentials, which are short, focused courses that teach practical skills. These are cheaper and faster, and 71% of SMEs say they prefer a mix of on-the-job learning combined with classroom-based training. SMEs should check with their industry bodies to find out what options are available.
- Since over 90% of SMEs agree that tech skills will be crucial in the future, it’s time to work with training providers to demand more courses on AI, cybersecurity, and other essential tools. Training programs need to evolve quickly to meet the needs of today’s businesses, and SMEs should advocate for faster updates to ensure that the courses remain relevant.
Small businesses aren’t large corporations with dedicated HR departments and training budgets. SMEs are lean, flexible, and often stretched thin. As one owner put it: “We don’t have time to send staff away for lengthy courses, and mental health is suffering due to cash flow problems and an inadequate online presence.
“The survey makes it clear that SMEs need affordable, flexible, and tech-savvy training options—not in the future, but right now. With the cost of living rising and economic uncertainty ahead, investing in training and upskilling is no longer optional—it’s a matter of survival for small businesses.
So, start small: check with your industry association, look for subsidies, or try out a micro-course. Your business—and your peace of mind—can’t afford to wait.
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