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The current state and vital role of Australian SMEs has been explored in the newly launched report by the Council of Small Business Organisations Australia and Commonwealth Bank.
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COSBOA pushes for targeted SME policies ahead of election
10 October 2024
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Critical challenges facing Australia’s small business sector have been addressed in the new 2024 Small Business Perspectives Report, launched by the Council of Small Business Organisations Australia (COSBOA) and Commonwealth Bank.
The report highlighted the cost of doing business, workforce and training, energy transition, artificial intelligence, industrial relations and government procurement contracts.
It also touched on significant findings such as rising business costs, workforce shortages, energy transition and cyber security threats.
COSBOA and CommBank said the report was created to spark meaningful conversations among policymakers, business leaders and the broader community to “champion the needs” of Australia’s small businesses and unlock their full potential.
COSBOA CEO Luke Achterstraat said the report highlighted the colossal pressure SMEs were under.
“Australian small businesses are the heart of every community, employing more than five million people,” Achterstraat said.
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“Yet, they are struggling to manage spiralling business costs. Small business needs a future of stability, growth and success for the benefit of every Australian.”
The report found that Australian small businesses faced a significant cash flow crunch.
According to the report, this was fuelled by soaring business and living costs and exacerbated by unpaid debt from the high number of business insolvencies.
A recent study by CommBank found SMEs have been impacted by the cost-of-living crisis, as 52 per cent of business owners and senior managers reported the economic climate had negatively impacted their mental health.
It was also found that 57 per cent were under high stress due to financial strains and 25 per cent were using personal savings to keep their business afloat.
Achterstraat said COSBOA had put forward targeted policy interventions to alleviate business costs.
“These interventions will support small business sustainability, enhance business resilience and lead to a reduced cost of living, creating an environment where both business and consumers thrive,” he said.
“The areas we are focusing on include energy prices, rental costs, insurance premiums, least cost routing, payment times, barriers to entry and exit, regulatory burdens and instant asset write-offs.”
The SME report highlighted workforce challenges that continued to be faced by SMEs.
This includes a critical shortage of skilled and unskilled workers, with one-third of occupations nationwide experiencing shortages.
SMEs are also continuing to tackle rising energy costs.
Achterstraat said half of small businesses have yet to embark on an energy transition, hindered by huge financial barriers and a lack of knowledge.
The report noted 63 per cent of small businesses believe it is too difficult to fund the transition to renewable energy and 36 per cent said they have low knowledge on how to effectively do it.
COSBOA has advocated for a comprehensive national AI plan, as the report revealed many SME owners are concerned about AI growth, capabilities and potential risks.
Achterstraat said the plan should include education, training and appropriate regulatory frameworks for the safe and responsible adoption of AI across the SME community.
“Small businesses need access to training and affordable, responsible and practical AI products, as well as clear guidance and ethical regulation to harness AI’s potential and drive productivity gains.”
The report also showed that SMEs were “highly frustrated” with industrial relations and Commonwealth procurement contracts.
It was noted that the current market is the toughest operating environment SMEs have faced for a substantial number of years.
If better policies are not established, the “engine room” of the economy will not be supported which will mean a decrease in SMEs, reduced competition and prolonged higher prices, according to Achterstraat.
CommBank executive general manager of small business banking, Rebecca Warren, said the bank had reached out to SME owners to offer them support and helpful tools.
“Small businesses play a critical role not only in Australia’s economy but in what makes our country so special,” she said.
“It’s the family-owned cafes and sandwich shops, the bakeries and dry cleaners that make up the social fabric of our country and serve as the glue of our everyday experience.”
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