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Small and medium-sized enterprises in NSW have been the most impacted by cost pressures, according to ScotPac.
The latest round of ScotPac’s SME Growth Index asked Australian small and medium-sized enterprises (SMEs) to name the top three areas of rising business costs: 67 per cent of SMEs in NSW nominated higher wages, compared to 61 per cent for the rest of Australia.
Following this were compliance costs as the next highest rated cost by NSW SMEs at 60 per cent, compared to 53 per cent from other markets, while transport and logistics expenditure rounded out the top three areas of cost rises, with 51 per cent of SMEs listing this area as a pain point (although this was lower in NSW at 49.5 per cent).
ScotPac’s SME Growth Index found the top three strategies that SMEs are adopting in order to combat rising cost pressures, which are likely to “raise alarm bells for politicians and policymakers”, especially in NSW.
The top three strategies were:
1. Reducing workforce, with 62 per cent of SMEs in NSW decreasing their staff, compared to 52 per cent across the rest of the market.
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2. Increasing working hours, with 59 per cent of NSW SMEs bringing up operation hours, compared to 54 per cent nationally.
3. Downsizing, with over one-third (34 per cent) of NSW SMEs planning on downsizing to reduce sales volumes, compared to 41 per cent nationally.
ScotPac chief executive Jon Sutton said the findings gave a clear picture of the challenges SMEs are facing to whichever party forms government in NSW after the 25 March election.
“SMEs account for 98 per cent of all businesses across Australia and, as our largest state, NSW SMEs are the engine room of our national economy,” Mr Sutton said.
“As wages rise, SMEs are feeling the pinch and taking action to reduce their operating costs, particularly in NSW where cost-of-living pressures are the most acute in the nation.”
Mr Sutton added that there is a “golden opportunity” for the next NSW government to “take a razor to the red tape” and reduce compliance costs for SMEs.
“With targeted policies that cut the cost of doing business, further job losses can be stemmed, and NSW SMEs can remain competitive with their interstate counterparts,” Mr Sutton stated.
Last month (February 2023), ScotPac called for improved regulation on payment times as big businesses continued to fall behind.
[RELATED: ‘Tardy payments’ hurt SMEs: ScotPac]
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