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The spending slowdown shows few signs of easing, COSBOA says.
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Holiday calm leaves small business ‘adrift in eye of storm’
18 January 2024
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9 minute read
Small business owners find themselves “adrift in the eye of the storm” entering 2024 with an unexpected calm spell when they were relying on a seasonal surge, COSBOA says in its annual review.
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The small business body said high inflation and rising interest rates had contributed to a widespread contraction in spending last year that showed few signs of easing.
“Micro, SMBs and mid-market businesses have all experienced a slowdown in sales in 2023 relative to 2022 – year-on-year sales growth at the end of 2022 was 26.8 per cent, comparatively at the end of 2023 it was 4.5 per cent,” the review said.
“Consumer constraint in discretionary spending looks to continue in 2024, with 69 per cent of survey respondents indicating they had made cuts to their discretionary spending in the last six months of 2023.”
It said all businesses had suffered from a significant decrease in the average size of transactions, with the smallest operations hardest hit.
For mid-market businesses, average transactions had declined 6 per cent, for small businesses it was 10.6 per cent but micro businesses had been hit by a drop-off of 13.9 per cent.
The year had also witnessed an inversion of spending in sectors that had outperformed during the pandemic, such as home repair, leisure and home gym equipment.
CEO Luke Achterstraat said early signs that spending would hold up in those sectors failed to last the year.
“Even the survivors and high performers of 2022, such as entertainment and transportation, have been impacted,” he said. “We now see a general slowdown across all sectors, reflecting the cautious approach of households grappling with the highest interest rates in over a decade.”
“Emerging from 2023, small business owners find themselves adrift in the eye of a storm.”
“At a time traditionally marked by bustling holiday activity, small businesses encountered an unexpected calm spell.”
“Far from the seasonal surge they depend on, this period of unusual quiet starkly underscores the direct impacts of Australia’s cost-of-living and doing business crisis.”
He urged Australia to recognise that households and small businesses shared similar challenges and called for policies that supported the sector.
“As we sit in the eye of the storm, amidst this economic upheaval, Australia is faced with a critical decision: Do we abandon our small business community to the mercy of the storm, or do we guide them to safer waters?”
The 2023 Small Business Data Report was compiled by COSBOA and Square Australia.
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