Rising costs, weak consumer demand, and economic uncertainty continue to weigh on small business confidence
Long-term small business confidence in Australia is waning as rising living costs, high interest rates, and persistent inflation create an increasingly challenging economic environment, according to new research from small business lender Prospa.
The survey, conducted by RFI Global and involved 526 small business leaders across the country, revealed that only 32% of the respondents expressed confidence about their prospects over the next five years. This figure drops further to 29% when considering the next decade.
Cash flow remains a significant concern, with over a third (36%) of businesses expecting revenue growth over the next 12 months. However, 38% anticipate revenues to remain stagnant, while 23% foresee a decline.
The report also highlighted differences in how businesses of varying sizes approach debt. Larger businesses, those with annual revenues exceeding $2 million, are more inclined to take on additional debt, with 34% indicating plans to maintain or increase their debt levels.
In contrast, smaller businesses, particularly those with annual revenues under $100,000, are avoiding debt, with 66% reporting no current debt and no plans to borrow.
“While short-term small business confidence saw a modest uptick in June, long-term confidence continues to decline,” said Beau Bertoli (pictured above), co-founder and chief revenue officer at Prospa. “The overall environment of rising costs, subdued consumer demand and economic uncertainty continues to weigh on small business confidence and sentiment.”
He also emphasised that these pressures are particularly acute in the hospitality and construction sectors, where small businesses are disproportionately affected by stress and burnout, with the report indicating that 36% of small businesses in construction and 35% in hospitality are experiencing extreme levels of stress.
“High inflation and interest rates have strained household budgets and weakened consumer spending, while operating expenses continue to erode profit margins,” Bertoli said. “This impact is being felt disproportionately among small businesses depending on size and turnover.”
Bertoli called for targeted support and policy measures to boost the resilience and sustainability of small businesses, particularly in the most affected industries.
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