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While the cost of living, interest rates, and inflation are all of concern for business owners, research has revealed that small to medium companies are still experiencing growth.
Profit has continued to rise for the last three months, with 56 per cent of small and medium-sized enterprises (SMEs) recording increases in October, according to Fifth Quadrant’s SME Sentiment Tracker.
While this is good news for business owners, customers aren’t so lucky. Seventy-eight per cent of organisations reported passing these costs onto consumers, adding further pressure to those struggling.
Recession fears are on many people’s minds, with 89 per cent of SME owners concerned about rising interest rates. In fact, 56 per cent expect the Aussie economy to weaken in the coming months, and 37 per cent are not confident they’re able to withstand a recession.
“In summary, the October results continue the positive trend in SME confidence with growing revenues and profitability. SMEs have been more positive since August, but rising interest rates and high fuel and energy costs remain significant areas for concern,” commented Fifth Quadrant managing director James Organ.
“As we enter the Christmas trading period, it will be interesting to see if sentiment holds up as many consumers adjust their budgets to accommodate the latest interest rate rise.”
It appears organisations are responding to this uncertainty by slowing down hiring. Currently, just 20 per cent of respondents said they were advertising vacancies.
These rising costs will affect businesses and consumers alike. Recently, HR Leader discussed the impact the Reserve Bank’s cash rate decision could have on SMEs over the Christmas period, with some preparing for the worst.
“We were already expecting seasonality hiring to reduce as businesses seek to recoup losses, so the RBA’s rate rise of 25 basis points will no doubt be a kick in the guts for our small business community,” said Employment Hero chief executive Ben Thompson.
“With already thin or shrinking profit margins, Australian SMEs face even greater financial burdens coming into the end of the year. Not to mention that Australian workers already grappling with the rising cost of living now must face the possibility of reduced job opportunities and hours as businesses scramble to adjust their plans and budgets.”
Mr Thompson added: “A move from the RBA to seemingly aid economic stability could realistically result in significant instability for our small-business community and its workers.”
Further to this was the recent discussion of large organisations poaching the top talent, leaving SMEs struggling. These compounding issues could spell trouble for many over the holiday period.
Jack Campbell
Jack is the editor at HR Leader.
