COSBOA and CommBank Release 2024 Small Business Perspectives Report

The Council of Small Business Organisations Australia (COSBOA) and CommBank have launched the 2024 Small Business Perspectives Report, shedding light on the critical challenges facing Australia’s small business sector. The report examines issues including rising business costs, workforce shortages, energy transition, artificial intelligence (Ai), industrial relations and access to government procurement contracts.

Business Costs and Financial Pressure

Small businesses across Australia are dealing with increasing financial pressures, from energy and rent to insurance and interest rates. The report highlights the impact of these rising costs, with many businesses struggling to keep up.

Luke Achterstraat, CEO of COSBOA, discussed the mounting pressure on small businesses. “Australian small businesses are the heart of every community, employing more than 5 million people. Yet, they are struggling to manage spiralling costs. Owners are doing their best to stay afloat, but this is not an easy task in a climate of economic and regulatory uncertainty,” Achterstraat said.

Rebecca Warren, Executive General Manager of Small Business Banking at CommBank, echoed these concerns, stating, “Small businesses play a critical role in Australia’s economy and society. However, they face significant challenges, including high inflation, interest rates, and workforce shortages. Many businesses are feeling the squeeze as they try to navigate rising costs and evolving digital landscapes.”

CommBank’s research found that over half of Australia’s small- and medium-sized businesses are under significant stress due to the cost-of-living crisis. Fifty-two per cent of business owners report their mental health has been affected by the economic climate in the last 12 months, while 57 per cent say financial strains are a source of high stress.

Workforce Shortages and Training

Workforce shortages remain one of the biggest challenges for small businesses, particularly in industries that rely on skilled and unskilled workers. With more than one-third of occupations experiencing shortages, businesses are finding it difficult to recruit the employees they need.

“The difficulty of finding skilled employees impacts our ability to develop competitive products and grow our businesses,” said Dominic Schipano, National Executive Officer at the Centre for Information and Communications Technology (CITT). He added that many business owners feel like they are treading water instead of achieving their goals.

The Jobs and Skills Annual Report 2023 highlighted several factors contributing to workforce shortages, including a lack of applicants and candidates without the necessary qualifications. Pay conditions, job locations, and uncertain economic conditions are also playing a role.

Achterstraat called for a comprehensive approach to address workforce and training challenges. “We need targeted migration policies and enhanced support systems that address the needs of small businesses. This should be part of the national workforce strategy,” he said.

Energy Transition

The report found that nearly half of small businesses have not started their energy transition due to financial barriers and a lack of knowledge about renewable energy options. Energy costs are a growing concern, with many businesses struggling to fund the switch to greener solutions.

Achterstraat explained, “Small businesses are grappling with rising energy costs, and many are unsure about how to transition to renewable energy. Financial challenges and a lack of understanding are significant barriers.”

While 21 per cent of businesses have installed solar panels and adopted energy efficiency practices, 63 per cent say it will be difficult to finance the full transition. Thirty-six per cent of businesses report low knowledge about what is required to implement renewable energy solutions.

Ai and the Digital Landscape

The report also highlighted the rapid growth of Ai and its impact on small businesses. While some businesses are adopting Ai, many are concerned about the speed at which it is advancing and the potential risks it poses.

COSBOA is advocating for a national plan that includes education, training, and appropriate regulatory frameworks to ensure that Ai is adopted safely and responsibly by small businesses. “Small businesses need access to affordable, responsible Ai tools that can drive productivity gains, along with clear guidance on ethical Ai use,” Achterstraat said.

Industrial Relations and Government Contracts

Changes to industrial relations have created new challenges for small businesses, particularly in relation to casuals, contractors, and labour hire. Achterstraat expressed concern about the complexity of these changes. “Small business owners are facing uncertainty as they try to navigate significant revisions to workplace laws. Many are worried about the financial and legal implications,” he said.

A survey by COSBOA found that 90 per cent of small business owners are less likely to employ due to the new rules around casual employment. Previously, the High Court endorsed a definition of casuals that focused on agreed contracts, but new legislation introduces a complex, multi-factor test that businesses are struggling to interpret.

Small businesses are also missing out on most Commonwealth government contracts, despite making up 97.5 per cent of all businesses in Australia. The complexity and expense of tendering for government contracts are barriers for many small businesses.

“Tendering for government contracts is a daunting process for small businesses. The system needs to be simplified so that small businesses can compete fairly,” Achterstraat said, urging the government to act on the recommendations of the Small Business Ombudsman to make the procurement process more accessible.

Call for Action

The 2024 Small Business Perspectives Report aims to spark meaningful conversations among policymakers and business leaders to address the issues facing small businesses. Achterstraat concluded, “This is the toughest operating environment small businesses have faced in recent memory. Without better policies, we will see fewer small businesses and reduced competition, which will lead to higher prices. We urge policymakers to consider the findings and implement the recommendations to support small business sustainability.”

For the full report, visit COSBOA’s website.

Last Updated on October 9, 2024 by Nick Ross