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Navigating critical challenges: COSBOA and CommBank launch 2024 Small Business Perspectives Report

The Council of Small Business Organisations Australia (COSBOA) and CommBank have today launched the 2024 Small Business Perspectives Report. This comprehensive report addresses the critical challenges facing Australia’s small business sector, including the cost of doing business, workforce and training, energy transition, AI, industrial relations, and government procurement contracts.

 

The Report highlights significant findings, including:

·  Rising business costs: Small businesses are grappling with increasing costs in energy, rent, insurance, interest rates, and complex industrial relations changes.


·       Workforce shortages: There is a critical shortage of both skilled and unskilled workers, limiting business growth and strategic development.


·       Energy transition: Nearly half of small businesses have yet to embark on their green transition due to financial barriers and a lack of knowledge.


·       Cyber security threats: Almost half of all cyber attacks target small businesses, with cyber criminals using increasingly sophisticated methods.

 

Luke Achterstraat, CEO of COSBOA, said this report shows that small businesses are under colossal pressure.

 

“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, highlights the critical role of Australian small businesses in economic terms, as well as in society. 

 

“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.

 

“However, small businesses are currently facing significant challenges, including high inflation, interest rates, and workforce shortages. Additionally, the rapidly evolving digital landscape requires increased investment in technology and cyber security, while rising costs of goods, wages, and regulatory compliance continue to squeeze profit margins.

 

“We have been reaching out proactively to hundreds of thousands of our small business customers to check in on them, to make sure they are receiving the support they need, and that they are aware of some our tools that can help them to run their business.”

 

The 2024 Small Business Perspectives Report provides an opportunity to explore the current state of small businesses in Australia and their vital role in promoting economic diversity and resilience. The aim is for it to spark meaningful conversations among policymakers, business leaders, and the broader community to champion the needs of Australia’s small businesses and unlock their full potential.

 

Luke Achterstraat said, “We urge the Government to consider the findings and heed the voices of small business leaders. Implementing the recommendations in the report will reduce economic and regulatory burdens, support the growth of existing small businesses, and foster entrepreneurship.”

 

The Report underscores the pressing issues faced by small businesses, providing detailed insights and proposed interventions across several key areas:

 

Cost of doing business

 

Australian small businesses face a significant cash flow crunch, fuelled by soaring business and living costs and exacerbated by unpaid debt from the high number of business insolvencies.

 

A recent study from CommBank found more than half of Australian small- and medium-sized businesses are feeling the stress of navigating the cost-of-living crisis, with 52% of business owners and senior managers reporting their mental health had been impacted in the last 12 months by the economic climate.

 

Adding to this pressure, 57% of business owners report high or very high stress due to financial strains, nearly one in three are unable to pay themselves, and 25% are using personal savings to keep their businesses afloat. Operating costs have surged, with 46% of businesses experiencing increased expenses.[1]

 

“It’s been a perfect storm: high inflation, rising interest rates, chronic labour shortages, industrial relations changes and high material costs,” said Denita Wawn, CEO, Master Builders Australia.

 

Luke Achterstraat stated, “COSBOA has put forward targeted policy interventions to alleviate business costs. These interventions will support small business sustainability, enhance business resilience, and lead to a reduced cost of living, creating an environment where both businesses and consumers thrive.

 

“The areas we are focusing on include energy prices, rental costs, insurance premiums, least cost routing (LCR), payment times, barriers to entry and exit, regulatory burdens, and instant asset write-offs (IAWO).”

 

Workforce and training

 

Australian small businesses continue to face significant workforce challenges, including a critical shortage of both skilled and unskilled workers. A recent analysis showed more than one-third of occupations nationwide are experiencing shortages, with 50% 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).

 

The Jobs and Skills Annual Report 2023 identified several factors impacting the ability to attract staff. Labour supply issues including a lack of job applicants (79%) and applicants lacking relevant experience or qualifications (59%). Job-related factors such as pay conditions (26%), job locations (24%), working days or hours (21%), and the type of employment offered (16%). Additionally, external factors such as uncertain economic conditions (24%) also play a role.

 

“Workforce and skills shortages are a handbrake on the economy and limit business growth,” said Achterstraat. “A comprehensive and strategic approach is needed to support and foster productivity and innovation in Australia’s small businesses. This approach should include targeted migration policies, enhanced support systems, and integration of small businesses’ needs into national workforce planning.”

 

Energy transition

 

“Straddling the frontline of the energy transition, Australia’s small businesses find themselves in a precarious position grappling with rising energy costs,” explained Achterstraat.


Half of small businesses have yet to embark on an energy transition, hindered by huge financial barriers and a lack of knowledge. The most common actions taken by small businesses are installing solar panels (21%) and implementing energy efficiency practices (21%). However, 63% say it will be difficult to fund the transition to renewable energy, and 36% report low knowledge about what is required.

 

Artificial intelligence


Despite the rapid uptake in some parts of the small business community, many small business owners are concerned at the astonishing speed of AI growth and capabilities, as well as the potential risks they present.

 

COSBOA advocates for a comprehensive national plan, including education, training, and appropriate regulatory frameworks for the safe and responsible adoption of AI across the small business community.

 

“Small businesses need access to training and affordable, responsible, and practical AI products, as well as clear guidance and ethical regulation to harness AI’s potential and drive productivity gains,” said Achterstraat.

 

Industrial relations

 

The Australian small business community is highly frustrated as they navigate a new landscape driven by changes to casuals, contractors, labour hire and other non-unionised elements of the workforce.

 

COSBOA remains highly concerned at the far-reaching burden on small enterprises already struggling under the cost of doing business crisis. Small business owners report uncertainty in interpreting and implementing the significant revision of workplace laws and the serious financial and legal implications.

 

A survey of COSBOA found that almost 90 per cent would be less likely to employ due the complex changes made to the definition of casual employment. Previously, the definition of casuals had been endorsed by the High Court with an emphasis on the agreed contract, but many small businesses now fear the time, cost and anxiety that will occur as they grapple with a new 3-page, 15-factor test of casual employment.

Commonwealth procurement contracts

 

Despite accounting for almost all businesses in Australia (97.5%)[2] and one-third of the country’s Gross Domestic Product[3], small businesses miss out on most Commonwealth government contracts.

 

“Tendering for government contracts is expensive and daunting for small businesses lacking the resources to navigate these systems effectively. To give small businesses a fair chance, the process must be simplified, with less red tape and complexity,” acknowledged Achterstraat.

 

COSBOA appeals to the government to simplify the process and act on the Small Business Ombudsman’s recommendations to systematically address and remove barriers to Commonwealth procurement contracts.

 

Reflecting The Report’s findings, Luke Achterstraat concluded, “The reality is this 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”.

 

For the full COSBOA and CommBank 2024 Small Business Perspectives Report



-ENDS-

 

For media enquiries or interviews, please contact Luke Achterstraat, Chief Executive Officer, COSBOA on ceo@cosboa.org.au or call (+61) 433 644 097.

 


[2] ASBFEO Number of Small Businesses in Australia Report, August 2023.

[3] ASBFEO Contribution to Australia Gross Domestic Product Report, June 2023

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