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Why small businesses are predicting another tough year

Latest data from the Australian Bureau of Statistics (ABS) confirms there were 849,075 small businesses in NSW as of June 2023, an increase of just 0.8 per cent over the financial year, compared with a 0.6 per cent increase for Australia. The ABS defines small businesses as having 20 or fewer employees.

ABS data confirms tough times for small business

NSW Small Business Commissioner Chris Lamont said an increase in the number of business exits (the highest in five years) and very modest growth in the number of new small businesses was concerning and pointed to both challenging conditions and the ageing of small business owners and operators as a group.

The ABS data identified an increase in the number of non-employing small businesses over the year (up 3.1 per cent) and a decrease in employing businesses (down 2.4 per cent).

Small business expectations conservative going into 2024

Small business confidence remained low in December, increasing just three percentage points to 33 per cent. Expectations around profitability and revenue were unaffected by the forthcoming holiday period, with a significant portion of businesses (47 and 40 per cent respectively) expecting a decline in profitability and revenue.

The number of businesses looking to expand their operations dropped 5 percentage points to 32 per cent while concerns around the cost of business inputs increased by 3 percentage points to 84 per cent.

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Predicted retail electricity and gas price increases as well as cashflow and availability of working capital remain the second and third highest issues of concern to small business, with 76 per cent and 70 per cent expressing concern respectively.

The majority of businesses surveyed expect another tough year, with approximately three in five (58 per cent) anticipating 2024 will be a difficult year.

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