The report found that while cashflow remains a significant concern for small businesses, many have a sense that the worst is over with moderating inflation pressures, improving consumer sentiment and a small uptick in optimism following the Reserve Bank of Australia’s recent reductions in the target cash rate.

Australian Small Business and Family Enterprise Ombudsman Bruce Billson explained that this modest lift reflected a shift towards re-pricing as input inflation starts to ease, with a longer-term view on margins, cost containment and growth opportunities among small-business owners.

“For small and family businesses, higher interest rates not only impact their costs of financing but have profound implications for customers in terms of their spending, preferences and confidence. The Reserve Bank of Australia’s decision to further reduce the target cash rate to 3.85 per cent and moderating inflation pressures provide a ray of light after a prolonged period of difficult conditions for small and family businesses,” Billson said.

The report noted that household spending is showing early signs of recovery, although it remains weak in the hospitality industry. Cost of living pressures still remain, constraining demand in the hospitality sector and other sectors that rely on discretionary spending.

The recent flooding may also adversely impact some small businesses. “Many small businesses have navigated the impacts of natural disasters so far this year,” Billson said. “However, the recent flooding will likely have an impact over the year (and potentially years to come), with small businesses active in seeking help tailored to their very difficult circumstances.”

While there has been a modest uptick in small businesses considering hiring additional staff, particularly in the hospitality and disability support industries, many businesses still find it difficult to find suitable staff. “(This is) reflecting a persistently tight labour market, and prospects for productivity improvement remain weak,” the Ombudsman commented.

The Small Business Pulse is a health check of objective vital signs for small businesses while also taking into account the ‘animal spirits’ that drive decision making.

“The small uptick in optimism of small-business owners is magnified in those considering starting a business. These entrepreneurial ideas focus on addressing social and environmental issues such as improving outcomes for vulnerable people, sustainable farming and renewable energy. Queries about starting a business were notably driven by an uptick in current and prospective digital nomads and influencers.

“We need to do more to energise enterprise and create and nurture the spark that will inspire someone to turn an idea into investment, to build a business, to take on the risk and big responsibility of creating an opportunity-generating new enterprise, and to employ that extra person,” Billson said.

The post Improving inflation and consumer sentiment offering a boost to small-business health appeared first on Inside Small Business.

We should be concerned by the 2023 Edelman Trust Barometer Report. It is an annual survey of 32,000 people in 28 countries that measures trust in institutions and industries. This year, for the third year in a row, Business is the only trusted institution across the world. I guess this reflects the fact that businesses were able to react to the COVID-19 pandemic better than governments. Trust in Government has fallen again – hardly a surprise.

The most startling result for me is the collapse in economic optimism. The survey asked all those people the question, “Thinking about the economic prospects for yourself and your family, how do you think you and your family will be doing in five years’ time?”

Only four out of 10 people think they will be better off in five years. That is a 10-point drop since last year. That’s a lot of people who are feeling pessimistic about their future. Psychologists tell us that  

• pessimism contributes to depression and anxiety
• pessimism contributes to negative health effects
• pessimists tend to have greater stress and fewer resilience skills.

When we continually look for the negatives in life, it’s not surprising that that’s exactly what we find – more negatives!

Why so pessimistic?

The Edelman Report gives us an insight into why so many of us see our future in a negative light.

• We see our ‘social fabric’ breaking down.
• Almost two-thirds believe that the ‘lack of civility and mutual respect’ is the worst they have ever seen.
• Just over half of us believe that our country is more divided now than in the past.
• They believe that there will be worse to come if our societies remain as polarised as they are now:
  • worsening prejudice and discrimination
  • slower economic development
  • violence in the streets
  • financial suffering
  • inability to fix things up.

However, there is a bright side to the report. If you are reading this post, you are most probably going to be part of the solution.

While business in general is trusted across the world, people trust their own employer more. Even those pessimistic people trust their own employer. If you are a family business owner, you are even higher up the trust list.

So, how do we, as business owners and managers, work to get society back to a place of trust? Easy – we engage with society in more ways than simply buying and selling goods and services.

Our stakeholders (employees, suppliers, customers) want us to speak up and take action on the big issues that face us:

• climate change
• economic inequality
• energy shortages
• healthcare access
• trustworthy information
• workforce reskilling.

That’s a big, broad and probably overwhelming list, but the report gives us several specific measures we can all actually do. Amongst these are:

• Pay a fair wage, and make sure your suppliers do, too.
• Support the community where your business operates.
• Pay fair corporate taxes.
• Speak the truth – publish trustworthy content.
• Pull your advertising spend from platforms that spread misinformation.

That’s not the total list, but it’s a good place to start your 2023 with. 

• Retrain your employees to face a changed future when technology and automation eliminates roles.
• Defend facts and expose questionable science used to justify bad social policy.
• Support politicians and media that build consensus and cooperation.

Business has to lead, and restore economic optimism.  Where will you start?

The post How business can help to heal our lack of trust appeared first on Inside Small Business.

This comes on the back of research revealing that 81 per cent of Australian consumers are already actively seeking to reduce their carbon footprint. In that report 48 per cent of consumers stated they would actively avoid shopping at a business that did not source its products sustainably, while 13 per cent said they would only purchase from sustainable businesses by 2024.

The study noted that sustainability is a deciding factor as well for potential employees. Of the 51 per cent of Australians currently either actively looking or considering new employment opportunities in 2022, 43 per cent said they would not work for an employer that did not have an active sustainability plan in place.

The study also noted that Australia’s small businesses appear to be taking meaningful action when it comes to sustainability. Though 17 per cent of SMEs admit to not knowing where to start on their sustainability journey, 70 per cent said they are both actively exploring how to operate more sustainably and taking steps to improve their practices within the next year. And 77 per cent are looking to support community-led initiatives such as tree planting collectives, local clean up days and recycling programs.

According to Richard Wormald, Division President at Mastercard in Australasia, the research reinforces that implementing sustainable business practices must be a key agenda item for 2022 and beyond, alongside the need for leaders to take collective action against climate change.

“Tackling the global climate crisis isn’t possible without everyone’s involvement, no matter how big or small their footprint is, and Australians are looking to organisations to step up and do their part in protecting the planet,” Wormald said. “Taking collective action provides an opportunity to reduce overheads and time-consuming administration for SMEs while contributing to a greater output and result for the environment.”

Australian consumers and business leaders are open to using technology to become more sustainable (61 per cent and 72 per cent, respectively). And 84 per cent of consumers who make efforts to track their carbon footprint or sustainable behaviour do so via technology such as apps or wearables, while 25 per cent said they would purchase more products and services from brands that allowed them to track their carbon consumption. On the business side, 72 per cent of leaders are interested in adopting new technologies to improve their sustainable practices, including data analytics (45 per cent), automation technology (42 per cent) and blockchain (32 per cent).

While being green is perceived by some to be more costly, 55 per cent of businesses are confident that implementing these initiatives will increase their profitability in 2022. Over half, 53 per cent, of Australian businesses say they intend to diversify their product or service offering this year to make it more sustainable, meeting the growing customer demand for sustainability, with 53 per cent of customers saying that making purchases that benefit the environment is on a par with supporting local Australian businesses.

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