Small business owners across Australia are feeling the pinch as the cost of doing business skyrockets, with one in five forced to cut personal income, according to the latest findings from the MYOB Business Monitor.

The report, based on a survey of over 1000 Australian small business owners and operators, highlights the increasing challenges faced by small and medium-sized enterprises in the current economic climate. A staggering 58 per cent of respondents indicated that the cost of doing business has become a more significant issue over the past year.

In response to these escalating costs, business owners have adopted various strategies to cope, including incorporating price increases into their products and services (29 per cent), sacrificing profit margins (28 per cent), and even reducing or forgoing personal income (21 per cent).

Paul Robson, CEO of MYOB, acknowledged the difficulties facing small business owners, emphasising the resilience of Aussie business owners in navigating these challenges.

“SMEs are known to be resilient, but many will need to overcome hurdles this year to ensure the long-term prosperity of the sector overall,” said Robson.

“We’ve seen no shortage of challenges in recent years, and the impacts of higher operating costs, combined with consumer belt-tightening, is reflected in the pricing, profit, and income decisions of small business owners, as they try to achieve more with less.”

Small businesses still optimistic

Despite the daunting economic landscape, there is a glimmer of optimism among newer businesses. The report reveals that 36 per cent of startups (businesses operating for less than two years) anticipate economic improvement in the coming year, compared to only 19 per cent of established businesses operating for a decade or more.

Robson noted, “Businesses born in the last two years have emerged more optimistic and strong, feeling positive about the year ahead.”

Furthermore, the MYOB Business Monitor underscores the importance of digital tools in enhancing business productivity and success. Forty-three per cent of startups surveyed increased their use of online tools in the past 12 months, compared to 21 per cent of small businesses overall.

“Building and growing a business against the backdrop of challenging market conditions means businesses are looking to supercharge their productivity right from the start,” explained Robson. “Digital capabilities enhance productivity, helping SMEs save time and money, improving accuracy in their business, thereby increasing their likelihood of success.”

Robson suggested small businesses have a crucial role to play in the growth of the Australian economy.

“Small and medium-sized enterprises are responsible for employing eight million people and contributing half of the national GDP,” he said. “Identifying ways to support all SMEs – from startups through to established businesses – is absolutely critical in building a thriving local business community and a strong national economy.”

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