Staff worries were skyrocketing for SMEs even before Omicron

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

Small and medium 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 a national research by leading SME non-bank lender ScotPac.

The 2021 SME Growth Index research which surveyed more than 1200 small and medium enterprises indicated that eight out of every 10 Australian business owners are most worried by compliance, cash flow and finding enough time in the day to complete tasks.

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

ScotPac’s SME Growth Index research

ScotPac’s Craig Michie said that staff worries were exacerbated by the pandemic, with the twice yearly ScotPac 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 10 of the SMEs we fund said they 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 which have been driven by 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 – this is more than double the 2018 findings (31%).

Three SME stresses led by surge in compliance concerns

The recent SME Growth Index found three stresses have by far the biggest impact are 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 SME owners,” Mr Michie said.

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

“The second biggest concern identified this round was SME 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.”

Access to funds is vital for strong cashflow and ScotPac created a $100m SME Bounce Back Fund for businesses 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.

According to this surveying round, other significant concerns for business owners included the impost of new taxation measures (44%) and supply chain disruptions (27%).

This was found to be 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.

ScotPac assesses the 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,” he said.

Furtherstill, 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 SME concerns and assist their SME 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.