Staff worries skyrocketed for SMEs before Omicron made things worse

Craig Michie, Group Executive, Client Acquisition and Asset Finance at ScotPac Business Finance

Business owners were already struggling with staff issues in the second half of 2021, well before the January 2022 Omicron spike exacerbated their staff shortage woes, according to national research by leading Small and Medium Enterprises non-bank lender ScotPac.

2021 Small and Medium Enterprises Growth Index research polling more than 1200 Small and Medium Enterprises indicated that eight in every ten Australian business owners are most worried by compliance, cashflow and finding enough time in the day to complete tasks.

This highlights the constraints that the Small and Medium Enterprises sector was already operating under at the start of 2022, even before the current Covid-related stresses.

ScotPac’s Craig Michie said that staff worries have been drastically exacerbated by the pandemic, with research recording a fourfold increase in staff issues since 2018.

“Staff issues was nominated as a key concern by almost half business owners (49%), compared to three years ago when significantly fewer (12%) called it their top concern.”

“Since 2022 began, 8 in every 10 of the SMEs we fund are struggling to keep existing staff on the job and to find new staff to ensure their businesses operate each day.”

“Business owners have so much on their plates right now, and staff issues driven by the spread of the Omicron variant 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.”

Mr Michie said that the research found around two-thirds of business owners (65%) are concerned about customer issues and this is more than double the 2018 findings (31%).

SME stresses led by surge in compliance concerns

The most recent SME Growth Index found three stresses have by far the biggest impact – compliance, managing cashflow and having enough time in the day to get the job done.

“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% of Small and Medium Enterprise owners,” Mr Michie said.

“In 2018 only 10% of SMEs cited government compliance requirements as a pressing concern and therefore, this issue has really surged for small business owners.”

“The second biggest concern identified this round was Small and Medium Enterprise owners having enough time to complete tasks, a worrying factor for 84% of businesses.”

“Rounding out the top three issues was cashflow concern, nominated by 81.5% of SMEs.”

Getting access to funds is vital for strong cashflow.

This is the reason why ScotPac created its $100m SME Bounce Back Fund which allows business owners to access up to $1m capital with the first 3 months interest-free.

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.

Other concerns for businesses are the impost of new taxation (44%) and supply chain disruptions (27%) – 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

With the research 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%) and pandemic recovery (27%) as their biggest worry.

“These pandemic-specific responses were well down the priority list, behind the perennial issues that plague small business owners – red tape, long hours and cashflow.”

Still, more than four in 10 SMEs (42.5%) did stress about sudden business model disruption. This is significantly up from the 26% concerned about disruption in 2018.

Advisors like accountants, brokers and bookkeepers should be alert to these concerns and assist their clients with information or advice around ways to solve these issues.

“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,” Mr Michie said.

ScotPac is a non-bank SME business lender, providing funding to small, medium and large businesses from start-ups to enterprises exceeding $1 billion revenues.

For more than 30 years ScotPac has helped business owners to succeed by unlocking the value from their business assets. Whether it is purchasing stock, investing in vehicles and equipment, improving cash flow or accessing additional working capital, ScotPac can help.

SME Growth Index is Australia’s in-depth research on small business growth prospects.

Twice a year since 2014 market analysts East & Partners conduct this independent research on behalf of ScotPac. For the H2 2021 research round, a representative national sample of 1255 $1-20m revenue businesses were surveyed and interviewed.

ASBFEO (Small Business Ombudsman) and ScotPac have created an information resource for Australia’s Small and Medium Enterprise sector which is a free Business Funding Guide outlining a wide range of funding styles that can ease cashflow concerns.

It is available as a download for SMEs and their advisors like accountants and brokers.