Westpac has released a new report which found that the favourable market conditions and boost in infrastructure spending has left small businesses feeling optimistic about the next 12 month.
Westpac’s Small Business Report, which was commissioned in collaboration with Deloitte, has found that small businesses are optimistic about their prospects over the next 12 months despite facing many challenges such as slowing economy, tightening margin pressure and different state-based policies.
Although the majority of small businesses are looking ahead to revenue growth over the next year, many are reluctant to grow by hiring staff due to ‘too many policies and procedures’ and cost barriers.
This has caused businesses to fall behind in increasing their employee headcount, with one third (31%) of respondents employing fewer people today than 12 months ago.
“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,” reads the report.
Ganesh Chandrasekkar, General Manager of SME Banking at Westpac says there is some light at the end of the tunnel which can 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.
“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.”
The report has also found that in an effort to supplement household income, one third of small businesses – particularly amongst non-employing businesses (41%), female small business owners (40%) and industries such as agriculture (52) and arts (45%) – have taken on a second job or ‘side hustle’, revealing their most common fear is having no financial security.
Another key finding showed that one in five small business owners have no income outside their business and 15% would lose equity in their home if their business were to fail.
“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,” Chandrasekkar said.
“At Westpac we approve 93% of lending requests received. Despite this two in three business owners do not request funding, leaving many small businesses cash-strapped. Before taking on a side-hustle or putting undue stress on yourself, know that Westpac is here to help with $30 billion ready to lend to small businesses for the right investments.”