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SMALL BUSINESS IS TOUGH, BUT IMPROVING Featured
05 September 2019 Posted by 

SMALL BUSINESS IS TOUGH, BUT IMPROVING

Employment barriers restrict growth
DALLAS SHERRINGHAM

SMALL businesses will grow but the growth potential is being hampered by employment barriers according to a new report from Westpac.

The latest Westpac Small Business Report in collaboration with Deloitte said sentiment was starting to improve amongst small businesses with many looking ahead to revenue growth in next 12 months

It found two-thirds of small businesses wanted to hire extra help but faced many challenges like different state-based policies

One third of small businesses are employing fewer people today than 12 months ago and the same proportion have a second job to support income.

The report said small businesses were saying that despite recent tough conditions, they were looking forward to growth in the next 12 months, off the back of improved economic and political certainty, however many were reluctant to grow by hiring staff due to too many policies and procedures.

“Although small businesses are matching the wider economy in growth terms, they are falling behind in increasing their employee headcount, with one third of respondents employing fewer people today than 12 months ago,” the report said

The most common hurdles to hiring are financial 38%, only needing help occasionally 28% and wages and penalty rates 24% - suggesting more support is needed across industry and government to help businesses break down employment barriers.

General Manager of SME Banking at Westpac Mr Ganesh Chandrasekkar said many small businesses faced tough conditions during the last six months with a slowing economy and tightening margin pressure, however there was some light at the end of the tunnel which could help boost employment.

“Given recent RBA interest rate cuts, a boost in infrastructure spending and a better-looking housing market, many small businesses say they are optimistic about the coming 12 months,” he said.

Employment barriers

“One way to boost confidence back into the market is to remove the complexities and challenges small businesses face when it comes to hiring. If every employing small business took on one additional staff member, that is 900,000 jobs. Even if we could create a fraction of that amount by removing employment barriers, it would make a big difference,” Mr Chandrasekkar said.

To supplement household income, one third of small businesses have taken on a second job or ‘side hustle’, revealing their most common fear is having no financial security.

This is particularly common amongst non-employing businesses at 41%, female small business owners at 40% compared to 25% of males and industries feeling more exposed in the current environment such as agriculture 52% and arts 45%.

Many small businesses are taking advantage of the gig economy to embrace on-demand solutions that provide flexibility and easier access to casual employees, and it’s growing quickly – increasing 68% in revenue terms in one year in NSW.

However, one in five or 20% small business owners have no income outside their business and 15% would lose equity in their home if their business were to fail. The average small business household gets 63% income from the business.

“This places an extraordinary amount of pressure on business owners, their families and employees, for the business to perform. With over half of Australian small business owners using their personal savings to establish their business, this can have a deep impact on their mental and financial wellbeing,”. Mr Chandrasekkar said

Westpac is expanding its unsecured lending offer from the beginning of 2020, to help more small businesses access funds to manage growth. It’s estimated an extra $10B will be available in unsecured, conditionally approved limits, without the need to put up other assets as security.



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Publisher and editor, Michael Walls.
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