Navigating the Tightrope: How NSW Small Businesses Are Balancing Challenges in 2024
With insights rolling in from Business NSW and the NSW Small Business Commissioner, we’ve done the legwork to save you time and give you the scoop on what’s happening for small businesses across NSW. From rising costs to some cautious optimism, here’s what both organisations are seeing—and what it could mean for your business.
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NSW Small Businesses in 2024: Rising to Meet New Challenges
Small businesses in NSW are navigating a complex economic landscape, as recent reports from Business NSW and the NSW Small Business Commissioner reveal. From cost pressures to cautious optimism about the coming months, these insights highlight key trends impacting small and medium-sized enterprises (SMEs) across the state.
Business Confidence: A Mixed Outlook
Confidence among NSW businesses is subdued but shows signs of resilience. Business NSW’s August 2024 survey reported a drop in confidence to -67.8, the lowest in a year, with concerns over inflation and rising costs persisting. Meanwhile, the Small Business Commissioner’s September 2024 survey noted a slight uptick in confidence, with 25% of businesses expressing optimism after the Reserve Bank decided to hold interest rates steady. These signs of stabilising confidence suggest a degree of resilience, though broader economic pressures remain.
Profitability and Revenue Projections
While profitability remains a concern, there are glimmers of hope. Business NSW’s findings indicated that two-thirds of SMEs are just getting by, with 4% at risk of shutting down. In the Momentum Survey, only 13% of businesses expect profitability to improve in the next quarter, but this figure has inched up, especially with the holiday season approaching. Revenue projections are similarly cautious, with a third of businesses expecting a decline and only 19% predicting growth.
Top Concerns: Rising Costs and Workforce Challenges
Both reports underscore rising costs as a significant barrier. Business NSW found that insurance, taxes, and energy costs are top worries, with some SMEs opting to underinsure due to skyrocketing premiums. In the Momentum Survey, 85% of respondents cited rising input costs as their primary concern. Staffing also remains challenging, with many businesses struggling to find qualified employees. Nonetheless, 45% of businesses with growth ambitions plan to hire more staff, underlining the demand for skilled labor.
Adapting to Supply Chain and Regulatory Hurdles
Supply chain issues are slowly improving, but high freight costs and long delivery times are still affecting businesses’ ability to grow. Additionally, regulatory burdens, particularly in planning approvals, remain a frustration. The Small Business Commissioner’s survey highlighted delays in the planning system, with some businesses waiting over a year for approvals. These inefficiencies add significant costs and stifle growth, particularly for smaller firms.
Energy Efficiency Gains Momentum
Energy costs continue to pressure NSW businesses, driving more to explore cost-saving strategies. Business NSW reported that over 40% of SMEs have renegotiated energy deals, while others have invested in energy-efficient upgrades. This trend highlights the growing role of energy efficiency as a way to mitigate rising expenses and support sustainable growth.
A Glimpse of Optimism in the Momentum Index
The Momentum Index, which measures underlying business trends, rose to 99.7 in September, suggesting that while SMEs face ongoing challenges, there is a slight forward momentum. Many NSW businesses are focusing on expanding product offerings, improving service quality, and embracing new operational strategies to prepare for a potentially stronger 2025.
What’s Next for NSW Small Businesses?
With resilience as their foundation, NSW’s small businesses are navigating a shifting landscape, balancing cautious optimism with pragmatic strategies. By focusing on cost management, energy efficiency, and effective workforce planning, SMEs can better prepare for the months ahead. Staying informed and adaptable is key as NSW businesses look to tackle ongoing challenges while positioning themselves for recovery and growth.
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We hope this gives you a clearer sense of what’s happening across NSW’s small business landscape. With insights into the latest challenges and areas for growth, you’re better equipped to navigate what’s ahead. As always, staying informed and flexible can make all the difference—so keep an eye on these trends, and let’s tackle the road ahead together.