Survey Shows Small Business Confidence Up, But Struggling with Rising Costs
Despite a slight improvement in small business confidence towards the end of 2024, the outlook remains uncertain for many SMEs across New South Wales. According to the latest Small Business Momentum Survey, confidence levels saw a modest increase of four percentage points in December, with 28% of businesses expressing optimism about their future prospects. However, with ongoing challenges around cost pressures and profitability, many business owners remain cautious as they head into 2025.
Key Findings from the December Survey
- Confidence: 28% of small businesses reported confidence in their individual business prospects, an improvement of 4% from November, but still far from robust.
- Concerns Over Costs: 86% of businesses expressed concern about the rising cost of inputs, a major worry that continues to dominate the landscape for small businesses.
- Momentum Index: The Momentum Index dropped by 13.1 points, reaching 96.1, reflecting a dip in overall business sentiment.
- Expansion Plans: Only 28% of businesses reported plans to grow, alter, or expand their operations, down 7% from the previous month. This decrease highlights hesitancy in making bold moves amid uncertain conditions.
- Hiring and Staff: While 37% of businesses with expansion plans indicated they would hire additional staff, it was a significant drop from earlier in the year.
- Revenue Expectations: The survey showed a decrease in the proportion of businesses expecting revenue growth, with only 16% anticipating an increase, compared to 37% who forecast a decline.
The survey results clearly indicate that while small businesses in New South Wales showed some signs of confidence towards the end of the year, there are significant concerns that are dampening long-term optimism. The rising cost of business inputs remains a major hurdle, with businesses across the board feeling the pressure. From raw materials to energy costs, small businesses are grappling with inflationary pressures that are eating into margins and making it difficult to plan for growth.
Notably, businesses in Greater Sydney were more confident than those in regional areas, with 30% of Sydney businesses expressing optimism compared to just 26% in the regions. This divide suggests that businesses in urban centres might have better access to resources and opportunities, although the overall economic climate remains challenging for SMEs everywhere.
The Road Ahead
Looking to 2025, the future seems more daunting for small business owners. A significant 66% of those surveyed anticipate a tough trading period in the coming year, with only 4% expecting things to improve. While these numbers signal a cautious outlook, it also highlights the importance for businesses to be adaptable and resilient in the face of these challenges.
The survey also pointed to a slowdown in major business decisions, such as capital expenditure and hiring staff, with many SMEs holding off on expansion plans until they have a clearer understanding of how the economy will evolve. This cautious approach could result in fewer job opportunities and a reluctance to invest in new technology or infrastructure, which could hinder long-term growth for many businesses.
For small businesses, the key takeaway from this survey is the need for careful planning and flexibility in response to uncertain conditions. While confidence has improved slightly, rising costs and economic instability mean that many will be focusing on maintaining stability rather than pursuing aggressive growth strategies.
As 2025 approaches, SMEs will need to keep a close eye on cost management, revenue generation, and workforce planning to navigate the challenging year ahead. With support from initiatives like the Momentum Survey and government-backed resources for small businesses, SMEs can work to identify opportunities even in difficult times. However, the path forward requires resilience and strategic decision-making to ensure long-term success in an unpredictable market.
For business owners looking to adjust their strategies, focusing on efficient cost management and smart investment in areas with high returns could be key to weathering the storm and finding growth opportunities even in these tough times.
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