NSW businesses on Struggle Street with rising costs cutting deep

- March 24, 2023 2 MIN READ
cafe tables on street outside restaurant

NSW small businesses are the most impacted by current economic conditions, with research from ScotPac reporting that rising wages, compliance and transport costs are hitting the state’s small business owners in their hip pockets. The findings form part of the bi-annual SME Growth Index.

Asked to name the top three areas of rising business costs today, over two thirds (67 per cent) of business owners in NSW nominated higher wages, compared to 61 per cent for the rest of the country.

Compliance costs were also eating up profits for NSW businesses with 60 per cent concerned about the rise in costs of red tape, compared to 53 per cent for other markets. Transport and logistics expenditure rounded out the top three areas of cost rises across the nation, with 51 per cent of small business owners listing this area as an increasing concern.

Job cuts and longer working hours ahead for NSW businesses

To combat these price increases, many small business owners are considering staff cuts. Sixty-two per cent of small business owners across NSW say they plan to reduce their head count. This is compared with 52 per cent across the rest of Australia.

Other strategies being considered to decrease costs include downsizing their business and increasing their operating hours.

How businesses will adapt

Fifty-nine per cent of small businesses in NSW plan to increase or have already increased their working or operating hours in an effort to stay ahead of rising business costs. This is compared with 54 per cent across the rest of the country.

Thirty-four per cent of NSW business owners were planning to downsize or reduce sales volumes, compared to 41 per cent in other States & Territories.

Challenging times ahead

ScotPac CEO, Jon Sutton, said the findings provided a clear picture of the challenges NSW business owners are facing and will need to be addressed by whichever party wins the state election.

“SMEs account for 98 per cent of all businesses across Australia and, as our largest State, NSW small and medium businesses are the engine room of our national economy,” Sutton said.

“As wages rise, SMEs are feeling the pinch and taking action to reduce their operating costs, particularly in NSW where cost-of-living pressures are the most acute in the nation.

There is a golden opportunity for the next NSW Government to take a razor to the red tape and bring down compliance costs for hundreds of thousands of SMEs. With targeted policies that cut the cost of doing business, further job losses can be stemmed, and NSW SMEs can remain competitive with their interstate counterparts.”

This article was first published on Kochie’s Business Builders, read the original here.

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