New COSBOA Report 2023 reveals: rising costs, declining revenue, workforce struggles, and cyber security risks faced by small businesses.
COSBOA has released its report “The Small Business Perspective Report 2023: Challenges & opportunities facing Australia’s small business community” – highlighting the emerging vulnerabilities and opportunities from another challenging year.
This report draws on the results and insights from in-depth stakeholder interviews, conducted in partnership with 89 Degrees East, and with nine COSBOA member industry-leading organisations.
An in-depth online survey was also conducted with 31 further industry leaders representing up to 140,000 Australian small businesses to understand their perspectives and to provide a snapshot of the key challenges and opportunities affecting the small business sector over the past 12 months.
The research included industry associations representing a diverse range of small businesses across industries including retail and hospitality, events, and entertainment; agriculture / rural; health; and B2B / business services.
The results and insights from the interviews and survey provide the basis for this report sponsored by CommBank, which will directly inform and strengthen our ongoing policy and advocacy objectives.
Small businesses crucial to Australia's economic growth and prosperity
The small business sector employs 6.8 million Australians, just under half of the total employed workforce. In the 2021-22 financial year, small businesses generated $856.8 billion in revenue, contributing $68.6 billion in net income tax and $19.2 billion in net GST.
This is why the ongoing success of small businesses is vital for the continued prosperity and well-being of the Australian community.
Costs of Doing Business
Australian small businesses are experiencing the long-tail effects of COVID-19 through increased operating costs and decreased revenue.
· Successive interest rate rises have impacted small businesses across all sectors.
· Rising energy costs are a significant concern for small businesses in most sectors and one which owners feel they have even less control over than others.
· Almost all industry leaders agreed that labour shortages and increasing wage entitlements are driving up the costs of production for small businesses.
· Insurance costs have significantly risen for small businesses across almost all sectors.
· Global and domestic supply chain pressures have resulted in a significant increase in the cost of purchases for small businesses.
Opportunities and risks have emerged as Australian small businesses navigate digital transformation.
· If harnessed correctly, emerging AI technology could prove useful to help small businesses meet the changing demands of their customers.
· Small businesses are increasingly aware of the growing risks of cyber-attacks, likely due to highly publicised data breaches in the media and increasing personal threats.
Labour Skills & VET
Australian small businesses are struggling to train, hire and retain skilled workers in an increasingly competitive environment.
· Industry leaders stressed the difference between the impacts of skilled labour shortages and shortages of other labour.
· Increasing the number of skilled migrants is generally perceived as a necessary policy lever to address the skills gap facing small businesses.
· Industry leaders are concerned that additional fee-free TAFE places are misguided and will fail to address skilled labour shortages faced by most small businesses.
· Industry leaders desire greater consultation with the small business sector before major industrial relations decisions are made.
Entrepreneurship & Innovation
New small businesses require support to break through in a challenging economic landscape.
· In some sectors, small businesses are uniquely positioned to creatively innovate.
· Most industry leaders believe that governments should play a greater role in supporting new small businesses.
Mitigating cost-related challenges: COSBOA's recommendations for Australia's small business community
The findings of this report demonstrate the range of cost-related challenges impacting the financial performance of Australia’s small business community. COSBOA recently made a submission to the Select Committee on the Cost of Living with recommendations aimed at mitigating these pressures and addressing the cost-of-living crisis.
COSBOA recommendations include:
· Energy cost relief
· Rental cost relief
· Downward pressure on insurance premiums
· Reduced barriers to entry and exit
· Reduced regulatory burdens.
COSBOA will continue to advocate for further action to foster a more sustainable and resilient small business community, which will ultimately help alleviate the cost of living pressures impacting Australians.
Read the full “The Small Business Perspective Report 2023: Challenges & opportunities facing Australia’s small business community” Here.
Thank you to CommBank for sponsoring this report.