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Privacy Wake-up Call: Most SMEs unprepared for privacy act changes

There’s no doubt that Australian small businesses are navigating turbulent waters. New research reveals that 85% of Australia’s 2.3 million small businesses are unaware of the pending changes to the Privacy Act that will incur new obligations around the handling of personal information for small businesses, further impacting SMBs in 2024.

Furthermore, the trials and tribulations SMBs are facing, as well as the innovative ways they’re adapting to survive. The findings from Localsearch’s 2023 State of Small Business report, the second annual report of its kind, shows that 1.7 million1 Aussie SMBs are concerned about inflation and its impact on their business, while almost a quarter (23.6%) say they’ve already been affected – up from 18.2% in 2022. A staggering 4 in 5 (81.3%) are concerned about a possible recession affecting their business in the next 12-24 months, which is also up on last year (78.5%).

Unmasking the Struggles of Small Business Heroes

A significant two in five (37.4%) SMBs attribute recent business challenges to adverse economic conditions, including inflation, interest rates, and reduced consumer spending, while a quarter (23.3%) are grappling with labour shortages.

COVID-19, though a global disruptor, is surprisingly not the most significant challenge for SMBs in recent years, with only one in five (19.9%) citing it as their biggest challenge. Turning focus to technology, a striking 1 in 5 (21.5%) Aussie SMBs have fallen victim to fraud or scams, revealing the vulnerability of these businesses to cybersecurity threats.

Innovating for Resilience

Though SMBs are up against it, they are actively innovating for resilience. A quarter (24.5%) have expanded their online presence to reach wider audiences and connect with communities, while almost a quarter (22.4%) are investing in cybersecurity software, and one in five (17.2%) is strengthening supply chains by expanding partnerships and supplier lists. In addition, a quarter (24.8%) have implemented cost-cutting measures, and 14.7% are diversifying their offerings to reach new audiences. These strategies reflect SMBs’ proactive approach to thriving in an ever-evolving business landscape.

Terence Watson, Co-Owner of Balance Mobility, based on the Gold Coast and Tweed, comments: “The State of Small Business report reflects the challenging landscape we’re navigating as business owners. We’ve found that investing in our employees’ growth and development has been more crucial than ever. We’ve prioritised proactive business planning and adaptability, ensuring our online presence remains robust, and our business model is flexible enough to respond to any challenge. Over the last few years we’ve heavily invested in marketing, from a website to Google Ads we’ve taken every opportunity we can to cement our online presence to future-proof our business.”

Daniel Stoten, Executive Chairman of Localsearch, comments: “At Localsearch, we’re genuinely excited that small businesses are increasingly investing in marketing to help their business through the tough times we’re currently facing. From our internal data, we know that marketing practices have a three to one return on investment so these are encouraging findings. We’re actively working with our customers across Australia to implement the most cost-effective marketing strategies to reap the most business reward, while also growing their customer base and online community.”

SMBs Pile Pressure on the Government: Seeking Support

Small and medium-sized businesses in Australia are turning to the government to increase support. Over half (53.4%) are calling for greater tax cuts tailored to small businesses. Additionally, 15.3% are advocating for subsidies to facilitate staff training, while one in 10 (11.3%) are pushing for government-backed initiatives to offer skilled workers higher wages. Another 8% are championing enhanced training opportunities for school leavers, recognising the need for a skilled workforce.

Skills Shortage

The Australian skills shortage gap is not new news. However, Localsearch’s State of Small Business report shows that the majority (55.8%) are now suffering from a lack of talent to undertake day-to-day operations, while half (49.6%) don’t have enough staff to keep up with demand, and almost two in five (38.8%) are restricting business growth and expansion as a result of the skilled worker shortage.

Of those looking to hire new staff, almost half (45%) admit to struggling to fill open role/s with the right talent. When relaying the challenges associated with hiring, over 7 in 10 (72.9%) cite there not being enough workers with industry experience, almost half (45%) say there’s not enough skilled workers to undertake high-level jobs and over a third (35.7%) say that skilled talent are looking for higher-than-average salaries. 

Gordon Jenkins, founder and manager at Gordy’s Furniture Removals based outside Sydney, commented: “We have been navigating tough times for a long time now, and Localsearch’s State of Small Business report speaks true to our experience. I’ve found it harder than ever to find staff that strike the right combination of loyalty to the job, having the right skill-set, and have reasonable pay expectations. Most of the time I end up hiring people who charge a huge hourly rate to deliver an average job. I often end up deciding that I’m better off pocketing the extra cash and delivering the work myself, ensuring that the customer receives the best service possible. I can’t keep working at this high level forever though, something’s got to give.”

A quarter (25.6%) share that a lot of applicants are fresh out of high school or tertiary education with little-to-no industry experience, almost a quarter (22.5%) say there’s lack of industry or government support for covering hiring and expansion, while over one in 10 (13.2%) say their business hasn’t bounced back post-COVID.

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