Many now turn to the government for additional support
Small and micro businesses in Australia are recovering more slowly than mid-market firms as they struggle to stay resilient amid challenging economic conditions, according to a new report.
The study, conducted by Square and the Council of Small Business Organisations of Australia (COSBOA), highlights the growing difficulties these businesses face, with many small and micro business owners now turning to policymakers and the government for additional support.
The State of Small Business Data report, using data based on millions of transactions processed on Square between January 2023 and June 2024, shows a two-speed economy.
Australian small and micro businesses lagged behind mid-market businesses in the first half of 2024. While mid-market firms dipped into negative growth in the July and October 2023 quarters before rebounding, small businesses saw a longer and deeper period of negative growth.
Consumer spending patterns fluctuated throughout 2023, impacting different sectors. Small retailers, for example, experienced a holiday season boost during December and January that pushed them into positive growth after months of decline.
Other sectors, such as healthcare and fitness, showed steadier spending, while industries like beauty and professional services saw more volatility. Hospitality businesses using Square technology, meanwhile, posted a steady rise in spending, peaking in the April 2024 quarter, despite broader industry struggles.
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Geographically, Brisbane-based businesses saw the strongest growth from late January to May 2024, recording a 10.49% year-over-year increase. In contrast, Sydney businesses posted the weakest growth at 5.03%. Data from Square indicates that businesses in cities like Brisbane, Adelaide, and Perth outperformed those in Sydney and Melbourne during the post-holiday period.
Mixed sentiment among business owners
The report also paints a complex picture of small business sentiment. While nearly half (49%) of small business owners are less optimistic about the Australian economy over the next 12 months, 53% maintain the same level of optimism about their own businesses compared to a year ago. A smaller portion (22%) expressed greater optimism, while 25% said they were less hopeful.
Inflation remains a significant concern, with rising operational costs affecting most small businesses. Seventy-three percent of business owners cited higher utility bills as a primary pressure, while 65% pointed to increased supplier costs. Other burdens include rising insurance premiums (63%), government levies (62%), and occupational costs such as rent and mortgages (50%).
In response to these pressures, 46% of small businesses raised prices in the past year, while 20% streamlined operations or adjusted their marketing strategies.
Calls for policy changes
Small business owners are looking to government for more support, particularly in areas that could ease financial and operational burdens. Nearly half (46%) want certainty around the future of the Instant Asset Write-Off scheme. Forty-four percent are seeking access to low-interest loans and grants to promote sustainability and innovation, while 42% are calling for incentives to help them adopt technology, such as digital payments and cybersecurity solutions.
“Every small business owner faces a unique situation – a distinct set of challenges and opportunities,” said Luke Achterstraat (pictured above), chief executive of the Council of Small Business Organisations of Australia. “This latest report from COSBOA and Square highlights this reality.
“Small business isn’t one homogenous mass, and this report underlines the need for policy solutions to be appropriately nuanced, tailored and targeted if small businesses are going to feel a positive impact. The individual experiences and voices of small businesses should also be routinely sought out, heard in policy discussions, and reflected in initiatives coming from all levels of government.
“Australia’s macroeconomic environment this year has been tough for small businesses, so it is squarely in the national interest to ensure that they don’t just survive but thrive. When small businesses succeed, the entire Australian economy benefits.”
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