The 2024 Federal Budget is fast approaching and business owners across Australia are holding their breath in anticipation, in hopes that some economic relief is in sight, writes Chris Dahl, CEO Pin Payments.

According to the Australian Bureau of Statistics (ABS), the Consumer Price Index (CPI) rose by 7.8 per cent in the last 12 months, its highest increase since 1990.

Likewise, nearly 60 per cent of Australian business owners say inflation and rising costs has directly impacted their cash flow management, according to a 2023 Xero survey. This economic uncertainty has also led to a decrease in mental wellbeing for founders, who reported a 60 per cent rise in stress, according to a BIS Cosgrove study.

With business owners facing a myriad of challenges right now, the Federal Budget this year is especially important. So, ahead of May 14, here’s a rundown of the most pressing issues facing Aussie small businesses.

Issues facing Australian small businesses

1. Rising Costs, Inflation and Economic Uncertainty

Australian small businesses are grappling with the combined pressures of rising costs, persistent inflation and an uncertain economic outlook. Inflation, predicted to remain elevated throughout 2024, is eroding profit margins as businesses struggle to absorb soaring costs for essentials like supplies, energy, and labour. This economic volatility creates a climate of uncertainty, hindering investment decisions and making it difficult for small businesses to plan for the future. As consumer spending slows in response to higher living costs, revenue streams become unpredictable, placing additional strain on businesses.

Cost control strategies are vital for SMBs right now. Don’t be afraid to negotiate with suppliers, and look for ways to streamline operations. You may have to pass on costs to customers through careful price adjustments, but make sure you do this strategically and communicate it to your customer base. Cost of living packages, further energy bill relief and rebates are the base minimum of what’s required to help SMBs this year. We hope to see greater initiatives that directly address the economic concerns of small business owners.

Takeaway: Economic relief packages and energy cost reductions, which specifically address the cost of living and how this impacts businesses, are key to this year’s budget.

2. Staffing challenges

Staffing challenges continue to plague small businesses in 2024, exacerbated by economic conditions. As the cost of living soars, workers are demanding higher wages to keep up, putting pressure on small business budgets. The tight labour market is also making it difficult to find qualified candidates, and even when positions are filled, retention is an ongoing battle. These staffing difficulties lead to increased workloads for existing employees, potential burnout, and a reduced ability to maintain service levels or pursue growth opportunities.

Given these challenges, retaining staff right now is vital. Business leaders should focus on upskilling, training and supporting their existing staff. With the budget around the corner, now might not be the best time to hire. Given previous budgets offered relief for staff training, funding and hiring, you may want to hold off until May 14.

Takeaway: If you’re considering hiring, you might want to wait until May 14 to see if the budget delivers any hiring, training or HR packages.

3. Keeping up with technology and AI fears

Artificial intelligence is, without a doubt, one of the biggest disruptors for businesses right now. Australia is at risk of becoming a low-skilled economy when it comes to AI adoption, with four in five Australians stating they’re concerned about its use. While fears around AI job displacement are valid, businesses need to focus on upskilling and retraining employees to work alongside these evolving tools. For businesses, AI presents many opportunities and concerns, so how can businesses better embrace and utilise AI in Australia? AI will be a major discussion point in this year’s budget, so businesses should make sure they’re across any training or support packages.

Takeaway: Listen out for any training, innovation or funding opportunities regarding AI for your business.

4. Cybersecurity and fraud

Cyberattacks are increasing in frequency and sophistication, posing a massive threat to businesses of all sizes, but especially small businesses who often have less resources and funds to put into prevention. As we’ve seen in the last twelve months, with major corporations being hacked in Australia, data breaches have the capacity to damage a business’s reputation and result in financial losses. The Australian Competition and Consumer Commission (ACCC) reported small businesses lost over $23 million to scams in 2022, highlighting their increased vulnerability to fraudulent activities. From a government level, we need to see greater support for SMBs, with regards to education and training to prevent cybercrime.

Takeaway: Listen out for any support for your SMB regarding cybercrime and fraud in this year’s budget.

While we don’t yet know exactly what will be covered in this year’s budget, business owners across the nation will be waiting in anticipation for some much needed relief and support this year.

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