(24 March 2023 – Australia) Rising wages and compliance costs top the list of growing cost pressures for Australian SMEs, with small and medium businesses in NSW the most heavily impacted.
The findings were contained in the latest round of the biannual SME Growth Index by ScotPac. Asked to name the top three areas of rising business costs today, 67 percent of SMEs in NSW nominated higher wages, compared to 61 percent for the rest of the country.
Compliance costs were the next highest rated by SMEs in NSW at 60 percent, compared to 53 percent for other markets. Transport and logistics expenditure rounded out the top three areas of cost rises across the nation, with 51 percent of SMEs listing this area as a growing pain point.
The headline strategies SMEs are adopting to combat rising cost pressures are likely to raise alarm bells for politicians and policymakers, particularly in NSW. The top three are reducing workforce, increasing working hours or downsizing their business.
ScotPac’s biannual SME Growth Index, now in its tenth year, is Australia’s longest running research report on SME business sentiment. The Round 18 research was conducted by East & Partners who interviewed 720 SME enterprises with annual revenues of A$1-20 million in February 2023.
ScotPac CEO, Jon Sutton, said the findings provided a clear picture of the challenges SMEs are facing to whichever party forms Government in NSW after the March 25 election.
‘SMEs account for 98 percent of all businesses across Australia and, as our largest State, NSW SMEs are the engine room of our national economy,’ Mr 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.’
ScotPac has been assisting business owners with tailored finance solutions at every stage of the economic cycle for more than 30 years.
‘We have the breadth of product to help more businesses in more situations than any other non-bank lender,’ Mr Sutton said.
‘Many SME owners and operators are not aware of the opportunities that exist to unlock the value of their assets and contracts to fund growth or manage operating expenses.
‘We would encourage all SMEs to talk to their advisors about how ScotPac could assist their business.’