State of small business in Australia

In 2023, consumer spending dropped due to the rising cost of living and the highest interest rates seen in the last ten years, impacting the growth of small businesses.

You may have noticed a decrease in trade in your business over the past year or two. This is because around 70% of Australian consumers were spending less than usual or stopped discretionary spending in 2023. The new report by the Council of Small Business Owners Australia (COSBOA) and Square revealed what this could mean for small businesses in 2024. Some key findings that small business owners should be aware of included:

• Consumer spending has reduced the most in microbusinesses with fewer than 4 employees (13.9% decrease in transaction value) and has also reduced in small businesses with fewer than 20 employees (10.6% decrease in transaction value). With business expenses increasing, these reduced profits may be leading to financial difficulties among small business owners. You can find out more about managing financial stress here.
• In 2023, there was a small (2.3%) increase in the number of non-employing businesses and a 3.5% decrease in the number of businesses with 1-4 employees, indicating some scaling down in business size. As a business owner, you may be downsizing or putting expansion plans on hold this year to help save money. This might mean more work for you or your staff, so ensure you are doing what you can to create a positive workplace environment for you and your team.
• In the 2022-23 financial year, more new businesses started than existing businesses closed, resulting in a growth in the overall number of small businesses in Australia. However, closure numbers were higher than in previous years, resulting in a low change in total number of businesses. The possibility of business closure can be stressful, but completing a wellbeing plan will ensure you are equipped to manage through stressful times.
• Consumers are most likely to spend their money on travel and experiences, food and drink, and entertainment in 2024. So small business owners in these areas may not notice a downturn.
  

This report shows small business growth is slowing as a result of reduced consumer spending, which may put pressure on you and your business throughout 2024.

But whatever happens, it’s important that you are looking after your wellbeing.