85% of SME owners looking to cut costs

Difficult economic conditions are prompting 85 per cent of small-business owners to seek cost reductions this financial year.

The Zeller Small Business Resilience Report collated insights from Australian small businesses to gauge how business owners are impacted by, and are responding to, challenging economic conditions.

According to the report, cost cutting is a top priority, with 85 per cent of small-business owners actively looking for ways to cut costs – with many opting for tactics such as renegotiating supplier contracts or surcharging eftpos fees.

Forty-two per cent of small-business owners cite their biggest concern as the increasing cost of supplies and materials, while 32 per cent reported reduced consumer spending as their biggest concern.

Supply costs are also a headwind, with 80 per cent of small-business owners estimating an increase in supply costs of more than 10 per cent in the past year. Meanwhile, one in five reported increases between 20 and 50 per cent.

A further 67 per cent of small-business owners raised concerns over inflation and rising interest rates negatively impacting consumer spending.

In some more positive news, staff shortages appear to be reducing, with 64 per cent of small-business owners saying it’s easier to recruit new staff today than 12 months ago.

Joshua McNicol, director of growth at Zeller, said the findings represent the ongoing battle small businesses are having amid tougher economic conditions nationwide.

“The Zeller Small Business Resilience Report reveals the impact a challenging economic environment is having on small-business owners – but we’re encouraged to see adversity breeding opportunity. Australian small-business owners demonstrate a rare breed of determination in adapting and identifying solutions to sustain their businesses through tough times,” he said.

Other studies have also indicated growing pressures facing employers going forward.

According to Allen & Overy’s Organisational culture in financial services report, technology and managing a multigenerational workforce is creating added stress.

“Whilst technological risk is front of mind for senior leadership, it can also create opportunity. Used effectively to enhance feedback and data analysis, it could highlight cultural issues that, when actioned, lead to long-term improvements,” said Clive Garfield, executive director at Allen & Overy Consulting.

“A multigenerational workforce brings diverse thoughts and opinion[s], which are proven to enhance decision making. Understanding this and adapting business strategy can have a direct influence on overall business performance. Organisations need to position culture as a strategic imperative and embed corporate values to support their business strategies.”

Allen & Overy Consulting chief executive Sally Dewar added: “Leadership teams need to continually assess and evolve their approach to organisational culture; the factors influencing culture today are very different when compared with the previous few years.”