These August 2022 responses describe expectations for FY2023, not current business conditions or the year’s eventual results.
About the Study
SMB Loan commissioned a survey of 253 Australian small to- medium business owners and decision makers to gauge their biggest concerns for the financial year ahead. Respondents were asked what they think will be their business’s biggest challenge in FY 23 and to specify the actions they will take to help their business through a tough year.
SMB Loan surveyed businesses across different organisational sizes: micro (1 to 10 employees), small (11 to 50 employees) and medium (51 to 200 employees).
The answers were collected for the August 2022 report. This page was published in January 2023; that later publication date does not change the period described by the survey. Recruitment methods, response rate, weighting and respondent counts for each state and business-size group are not available in the retained records. No subgroup counts have been inferred from rounded percentages. Treat the breakdowns as descriptive results; they do not establish national representativeness or statistically reliable differences between groups.
What are the biggest challenges SMEs
believe they will face in FY 23?
Respondents were asked to identify the biggest challenges they may face in FY 23. Nine in 10 (90 per cent) respondents reported that they expect their business to face challenges, with just 10 per cent stating they would not experience any challenges through FY 23.
Forty two (42) per cent of respondents indicated that fast rising inflation would be their biggest challenge, while reduced consumer or client spending due to inflation and RBA rate rises were a top concern for 41 per cent. Other challenges SME owners expect to face in FY 23 included fast rising interest rates (chosen by 28 per cent of respondents); having to pay higher wages on the back of the minimum wage increase and employee wage expectations (chosen by 22 per cent); the inability to fill roles in the business due to candidate shortages (19 per cent); and accessing financing or servicing loans and other debts (11 per cent).
The two leading concerns, inflation and reduced spending, affected opposite sides of the margin: higher costs and weaker demand. Respondents could identify several challenges, so the response shares should not be treated as mutually exclusive groups.
The biggest challenges SMEs believe they will face in FY 23. A State by State comparison.
Across the States, a higher proportion of WA businesses expect reduce consumer or client spending due to inflation and rate rises to be their biggest challenge, at 69 per cent. This compared with 47 per cent of SA businesses, 38 per cent in Victoria and 33 per cent in Queensland.
In the retained state table, wage pressure was selected by 38% in Western Australia, 24% in NSW, 17% in Victoria and 20% in Queensland. The original narrative’s Victorian 18% and Queensland 15% figures were inconsistent and have been corrected to the table. Subgroup bases remain unknown.
In contrast, fast rising inflation was identified as a significant challenge by Victorian SMEs for FY 23, chosen by 47 per cent of respondents in Victoria. This compares with 38 per cent in NSW and Western Australia, and 37 per cent in Queensland.
What do you think will be your business's
biggest challenges in FY 23?
| Response | |||||
|---|---|---|---|---|---|
| Businesses by State (%) | |||||
| NSW | VIC | QLD | SA | WA | |
| Fast rising inflation | 38 | 47 | 37 | 43 | 38 |
| Fast rising interest rates | 33 | 26 | 24 | 37 | 13 |
| Reduced consumer/client spending due to inflation and rate rises | 42 | 38 | 33 | 47 | 69 |
| Unable to fill roles in the business, due to candidate shortages | 24 | 18 | 15 | 10 | 25 |
| Having to pay higher wages on the back of the minimum wage increase and employee/candidate wage expectations | 24 | 17 | 20 | 23 | 38 |
| Accessing financing and/or servicing loans and other debts | 11 | 9 | 11 | 17 | 13 |
| My business will have challenges, but they are not listed above | 9 | 18 | 19 | 13 | 13 |
| My business will not have any challenges in FY 23 | 8 | 12 | 15 | 7 | 0 |
The biggest challenges SMEs believe they will face in FY 23. By business size.
Forty (40) per cent of medium sized businesses also identified fast rising interest rates as a significant challenge, compared with 37 per cent of small businesses and 23 per cent of micro businesses.
What do you think will be your business's
biggest challenges in FY 23?
Source limitation: This retained size table conflicts with the original narrative on several medium-business figures. The conflicting prose has been withdrawn. The original questionnaire and respondent file are needed to independently validate the cells; no replacement percentages or sample sizes have been invented.
| Response | |||
|---|---|---|---|
| Businesses by size (%) | |||
| Micro | Small | Medium | |
| Fast rising inflation | 40 | 41 | 42 |
| Fast rising interest rates | 23 | 37 | 28 |
| Reduced consumer/client spending due to inflation and rate rises | 45 | 35 | 41 |
| Unable to fill roles in the business, due to candidate shortages | 12 | 35 | 19 |
| Having to pay higher wages on the back of the minimum wage increase and employee/candidate wage expectations | 13 | 35 | 22 |
| Accessing financing and/or servicing loans and other debts | 9 | 13 | 11 |
| My business will have challenges, but they are not listed above | 19 | 9 | 15 |
| My business will not have any challenges in FY 23 | 12 | 9 | 10 |
What changes will SMEs make to get through
challenging periods?
SME owners were also asked to identify the actions they would take to get through the challenges they specified, should things get tough. Respondents could select from a list of six actions, and could choose more than one. Nearly nine in 10 (85 per cent) would take at least one action.
An equal 40 per cent of SMEs owners said they will pay themselves less or postpone any planned investment in the business, to see them through a challenging period. Thirty nine (39) per cent indicated that they would cut costs, such as switching to cheaper suppliers or cutting discretional business spending.
Other actions businesses would take to get through a challenging period included letting go of some employees (chosen by 11 per cent of respondents), refinancing or paying off business debts faster (chosen by 10 per cent), and seeking financing to help the business through tough times (8 per cent).
Will you do any of the following in FY 23 to get through the
challenging period, if things get tough?
What changes will SMEs make to get through a challenging period?
Across the States, more SMEs in Queensland and South Australia (an equal 54 per cent) said they would cut costs to get through a challenging period. This compares with 33 per cent of Victorian businesses and an equal 31 per cent of those in NSW and Western Australia.
A higher proportion of WA business owners said they would pay themselves less, at 50 per cent, compared with 39 per cent of respondents in NSW, 38 per cent in Victoria and 35 per cent in Queensland.
An equal 46 per cent of SMEs in NSW and Queensland said they would postpone planned investment in the business to cope through a challenging period. In contrast, 38 per cent of WA SMEs and 21 per cent in South Australia said the same.
Will you do any of the following in FY 23 to get
through a challenging period, if things get tough?
| Response | |||||
|---|---|---|---|---|---|
| Businesses by State (%) | |||||
| NSW | VIC | QLD | SA | WA | |
| Let go of some employees | 13 | 13 | 11 | 0 | 19 |
| Cut costs such as switching to cheaper suppliers and cutting discretional business spending | 31 | 33 | 54 | 54 | 31 |
| As a business owner, I will pay myself less | 39 | 38 | 35 | 46 | 50 |
| Postpone any planned investment in the business (such as equipment, new hires, technologies) | 46 | 39 | 46 | 21 | 38 |
| Refinance or look to pay off business debts faster | 13 | 8 | 13 | 4 | 13 |
| Get financing to help the business through tough times | 12 | 5 | 9 | 7 | 13 |
| None of the above | 15 | 17 | 11 | 18 | 19 |
Will you do any of the following in FY 23 to get through a challenging period, if things get tough?
