The big issues most affecting small business in 2023

Australia’s two million-plus small businesses employ close to half of the nation’s workforce and are often described as the ‘backbone of the economy’. But the problems they face and the issues that matter most to them are often not glamorous enough to get attention from the media or consumers, writes marketing expert, Katrina McCarter.

As a small business owner, the idea that nobody was giving a true voice to the stresses and issues facing the nation’s industrious, innovative small biz owners bothered me enough that in late 2022, I collaborated with four other Australian business experts to author the first annual Big Small Business Survey.

Our hope? That we do it every year, and that the findings will help industries and government departments that support small business deliver help where it’s needed.

We reached out to 584 business owners from a range of industries about their main post-pandemic challenges and concerns. Most (55 per cent) were aged between 41-56 years old. More than a quarter had been in business for more than ten years.

Amid the facts and figures and the revelations of top challenges (burnout, understanding the best way to grow a business, finding customers) the Big Small Business Survey took a deep dive into the five make-or-break themes small biz owners faced in 2022.  

Staffing

With labour shortages and Australia’s immigration laws, around a third of business owners struggled to find and hire quality staff in 2022. That meant 55.92 per cent of entrepreneurs shouldered much of the workload themselves. They also asked staff to work longer hours, increased prices and reduced operating hours.

“The overheads are killing me, personally and professionally,” said one respondent.

“Staff shortages make it difficult to train people when they do come on board, which results in diminished customer experiences and satisfaction,” says report author David Jensys. “The flow-on effects result in damage to brand and reputation.”

The solution:

Expanding the pool of job seekers is the obvious one but small business owners in Australia need more support in the form of grants, tax breaks and funding for new technology (which can minimise the need for staff).

As respondents shared, they could also benefit from less red tape when it comes to hiring and supporting employees.

Pricing

“With inflation rising and profit margins shrinking, finding the sweet spot for pricing is more of an issue than ever,” says report author Andrew Griffiths. He says the age-old question of what to charge has come into focus because of rising costs that have forced some businesses to make drastic changes.

Around 91 per cent of biz owners saw an increase of costs over 2022 but only 32 per cent increased their prices, usually by 5-10 per cent. When it comes to increasing prices, the biggest concerns include losing customers, losing out to competitors and figuring out how much to raise prices by.

“While the survey found many small business owners are positive about increasing revenue in 2023 … many are not actually taking action to change their prices. This is putting a question mark over their futures,” says Griffiths.

The solution:

More education, from accountants or advisors, so they can set prices with confidence.

Listen to Andrew Griffiths on charging what you’re worth on the Flying Solo podcast:

Mental health

The pandemic, lockdowns, frenzied recovery activity and fluctuating demand sees many small business owners use one word repeatedly to describe their mood and wellbeing: “Exhausted”. Overwhelmed and overworked, they believe they have a responsibility when it comes to supporting their team’s emotional wellbeing but this is adding to their feelings of overwhelm.

The facts are stark: more than half (58 per cent) of small business owners have experienced a mental health challenge in the past two years. The top three things keeping them awake at night are not having enough money to provide for themselves or their family, not having decent boundaries between work and family, and dealing with the increased cost of living. Respondents wrote they had “lost my mojo”, have a “can’t be arsed attitude” and are “feeling stuck”.

The solution:

More support for small biz owners with managing their own mental health, as well as accessing strategies and solutions to oversee the mental health of their team.

Marketing

More than two-thirds of small business owners expect to increase their marketing spend in 2023 but 61 per cent find marketing overwhelming. Over 83 per cent had “little to no” marketing plan for their business, and while 80 per cent say they’re using social media to grow their business, they’re challenged by time constraints and coming up with engaging content.

“Those who launch their business without a clear idea of how to get the message out report feeling ‘clueless’, even if they’ve had successful corporate career,” says report author Jenn Donovan. “But the importance of marketing is widely recognised by small business owners.”

 The solution:

Getting clarity by identifying goals and crafting a marketing strategy around them.

Technology

One upside of COVID? Businesses and consumers are adapting faster than ever to technology. One business owner even described the pandemic as a “time machine for their business” and only 4 per cent say they have a poor knowledge of technology. The majority (60 per cent) aren’t concerned about the impact new technology has on their business and when they do have knowledge gaps, they get up to speed via videos, podcasts and blogs.

Interestingly, “Over 36 per cent believe technology will replace either all or some of their business’s human roles within the next five years,” says report author Dale Beaumont. 

The solution:

While biz owners are excited and optimistic about technology, learning must be accessible for those who find this area of operating a business difficult.

The bottom line is constant changes in a post-pandemic world mean small business owners in Australia are busier and under more pressure than ever before, including with mental health issues. In 2023, anyone who wants to thrive should put aside time for education, find the right support and establish systems that lead to a business that flows.

Want to learn more about the state of play of small biz? Download the report: https://bit.ly/SurveyReport2022 

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