Many businesses in Australia are hurting right now. Inflation has sent supply costs soaring and interest rate hikes have seen consumers pull back on spending. Operating with thinner margins and fewer staff means having strategies around pricing, marketing, and your own mental health, are more crucial than ever. Read on to learn what the biggest challenges facing small businesses are, and some practical steps to help overcome them.
Snapshot
We surveyed over 1,000 small business owners across the country and the results are clear: they’re doing it tough. The majority (80%) of business owners cited rising costs and decreased consumer spending as the major challenges facing them this year (sentiments that were even more pronounced in regional and hospitality businesses) with more than 1 in 5 saying they’ve considered closing their doors in the past 12 months. Over half (55%) of businesses reported that their costs have jumped by up to 20 percent in the past year, and yet 4 in 5 said that their customers are spending less than they were last year.



Over a quarter of retail and hospitality businesses are at risk of closure.
Over 1 in 5 business owners (22%) said they’ve considered closing their doors in the past 12 months as a result of the pressure of increasing costs. This sentiment was particularly felt in the retail and hospitality industries where, respectively, 29% and 27%, of business owners had considered closing their businesses.
Rising costs continue to be the biggest challenge facing businesses.
Nearly half of business owners surveyed cited rising costs as the biggest challenge facing their business. Of these, supplies, utilities, and petrol were the costs that business owners deemed to have increased the most in the past 12 months.
The staples of our business, like flour and butter, have seen huge price increases. Butter sheets we use for pastries went from $200 to $350 a box, and flour has had spikes of 15-25%. The last few years have been far more financially challenging than the pandemic was.
Malcolm McCullough, Bill’s Farm, Melbourne

Consumer spending is down, but so are business’s marketing efforts.
With many consumers struggling with the cost of living and higher interest rates putting significant pressure on those with mortgages, average Australians have less money to spend. Indeed, 80% of business owners said that their customers were spending less today than they were 12 months ago. Surprisingly, however, nearly a third of businesses stated that they had no initiatives in place to retain customers, and keep them coming back.
Business owners are taking on more work themselves.
In response to the economic challenges presented, over half (56%) of business owners reported taking on more work themselves instead of hiring staff to support them, a strategy that can exacerbate the rising mental health issues facing small business owners nationwide.
Business owners are raising prices to offset rising costs but not all feel comfortable doing so.
Understandably, being forced to increase prices as a consequence of rising costs can be daunting for business owners, as it comes with the risk of losing valued customers. When asked how comfortable they feel about increasing their prices, only 15% of business owners felt “very comfortable” with roughly half feeling “somewhat comfortable”, and nearly a third of them not feeling comfortable at all.
How comfortable business owners feel in increasing prices.
Not comfortable
Somewhat comfortable
Very comfortable
Five tips for remaining resilient in a tough economy:
Understandably, being forced to increase prices as a consequence of rising costs can be daunting for business owners, as it comes with the risk of losing valued customers. When asked how comfortable they feel about increasing their prices, only 15% of business owners felt “very comfortable” with roughly half feeling “somewhat comfortable”, and nearly a third of them not feeling comfortable at all.
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