Aussie SMEs reveal the top 3 costs they will struggle to meet in 2023

Alon Rajic, Founder and Managing Director of Small Business Loans Australia

Much of the focus of this year’s unprecedented levels of inflation has been on the impact to households. However, new research reveals that seventy two per cent of small businesses – who have survived through the pandemic – have also been hit by rising expenses this year.

What was the research methodology?

Supplier costs, petrol and labour came out on top as the costs that SMEs are struggling with the most, and SMEs predict they will struggle with these same costs next year. The finding was derived from a survey of an independent panel of 210 Australian SME owners and decision makers, commissioned by Small Business Loans Australiaa comparison website helping business owners find the best financing and loan options in Australia.

The respondent pool comprised 44% of micro businesses (1-10 employees), 27% of small businesses (11-50 employees), 18% of medium-sized businesses (51-200 employees) and 11% of large businesses (over 200 employees). Respondents were asked which, out of the below 10 costs, they are struggling to meet the most now, and will struggle with next year: 

  • Labour 
  • Supplier costs 
  • Petrol 
  • Equipment purchases 
  • Rent 
  • Insurance premiums 
  • Office and staff amenities 
  • Utilities  
  • Business consultants 
  • Taxes 

What were the findings of the survey?

Nearly one in three (31%) SMEs are struggling with the supplier and petrol costs, and 26% cannot pay wages, salaries and contractors. Next, 21% are finding it hard to pay rent, 19% equipment, an equal 17% cannot meet the costs of insurance and tax. 10% cannot meet the cost of office and staff amenities and 8% with business consultants like HR or accounting. 

Small Business Loans Australia analysed responses across business sizes. Micro businesses predicted they will be better off in meeting expenses across all categories than small and medium-sized businesses: just 66% of micro businesses are struggling with costs and will continue to do so, compared with 15% of small and medium-sized businesses. 

The costs impacting small and medium-sized businesses most are supplier costs (for 46% of small and 34% of medium-sized businesses) and petrol (for 39% and 40% respectively).

Responses were also analysed across the major States. West Australian businesses indicated they are struggling to meet inflated supplier costs, labour costs and petrol prices above any other state. Following 38% of West Australian SMEs who are most likely to struggle paying labour costs, 27% of South Australian businesses, 26% of NSW businesses, 23% of Victorian businesses and 20% of Queensland businesses will also struggle in this category.

Inflated rent is a significant issue among South Australian and NSW SMEs, with 27% and 26%, respectively, struggling to meet this cost. Then 16% of Victorian and Queensland businesses and 14% of West Australian businesses. Small Business Loans Australia asked businesses if they would seek financing to cover any of the costs they are struggling with.

54% said they would look to get a loan to help relieve the financial stress of inflation, with over a quarter (28%) prepared to take out over $50,000. Micro businesses proved again their financial stability, as the least likely group to require a loan, chosen by 32%, compared with 66% of medium-sized businesses and three quarters (75%) of small businesses.

More than a third (37%) of small businesses surveyed would consider borrowing more than $50,000 to meet inflated costs, while 8% of micro businesses would borrow the same. 

What was Small Business Loans Australia‘s take?

Alon Rajic, Founder and Managing Director of Small Business Loans Australia, said: “SMEs have shown resilience through the pandemic and are now facing unprecedented inflation.”

“Like Aussie households, businesses have been hit by significant increases on the everyday costs of running their operations. SMEs are the backbone of the Australian economy, making up 98 per cent of the business market, but the tightening of budgets often have greater impact on SMEs, which tend to have smaller financial cushioning than bigger corporations.”

“If SMEs decide they need financing to get through the challenging period ahead, it is important for them to seek financial advice and research financing options to ensure they are in a position to service a loan over the next few years, and secure the most cost-effective and lowest-risk loan. A loan comparison platform may be a good place to start.”

The full survey results can be found here.