Small businesses still absorbing rising cost of business

ScotPac’s SME Growth Index latest report found that the majority of SMEs in Australia have experienced supply chain issues in the past six months and while some are passing increased costs on to customers, around a third were absorbing rising costs.

Interestingly, 5 per cent of SMEs lowered their prices in a bid to stand out from competitors.

Additionally, the report revealed that larger SMEs ($5 million to 20 million revenue) experienced average production and other input cost rises of 20 per cent, compared to 12 per cent for smaller SMEs ($1 million to $5 million revenue).

Larger SMEs also increased the price of their goods and services by an average of 18 per cent, compared to an average increase of just 1.5 per cent for smaller SMEs.

Small businesses revealed they needed to better navigate supply chain disruptions by finding alternate business funding tools, such as invoice finance (25 per cent) as well as getting better general risk advice and guidance (20 per cent).

ScotPac chief executive, Jon Sutton, said despite the easing of COVID restrictions in 2022, severe pockets of supply chain disruption were still being felt by SMEs.

“Supply chain disruptions affect a huge range of the goods and services we rely on every day, and the businesses that supply them,” Mr Sutton said. “Anyone who has tried to buy a new car in the past two years will have first-hand experience.”

Mr Sutton said recently there have been reports of pallet shortages that could impact the delivery of food, groceries, and medicines to supermarkets and pharmacies across the country, which again will affect the cost-of-doing business.

“A lot of business owners we work with are looking to invest in making their supply chains more resilient by purchasing reserve inventory, building or leasing warehouse space, sourcing additional suppliers or adding digital solutions,” he said.