New research1 released today from the Commonwealth Bank (CBA) shows that one in three small businesses are anticipating a drop in consumer demand and many are yet to feel the full impact of the increasing cost of doing business.
Of those small businesses surveyed, the primary concern is an anticipated drop in consumer demand (36%), with inflation and other pressures expected to affect consumer spending. This was followed by the cost of business insurance (31%) and transportation and logistics costs (28%).
The research shows that small businesses are more prepared than ever, with many poised to act and recognise the need to adjust if the anticipated drop in consumer demand occurs.
One-third of businesses (33%) have already reduced spending on non-essentials, another one-third (32%) have adjusted personal spending, while (27%) are being more disciplined around budgeting and expense tracking.
CommBank's Group Executive, Business Banking, Mike Vacy-Lyle said: "While inflation is creating challenges for many small business owners, the sector remains focused on being prepared. Australian entrepreneurs continue to show considerable grit and we are reminded of the amazing resourcefulness shown during Covid.
"We're seeing customers respond in pragmatic ways by making adjustments to their operations in response to an anticipated reduction in consumer demand."
Compared to consumers, small business owners continue to show lower levels of concern about the rising cost of living, but the proportion that are feeling the impact has increased since October 2022 when the survey was last conducted (+1%). While 20% (+4% vs Oct) report an operational impact, 23% (+5% vs Oct) report an impact on finance.
"We encourage our customers who experience financial difficulty to reach out for support early. CBA banks more than one in four of all businesses and we are here to support this important part of the Australian economy by offering personalised support and flexible loan structures to help at every stage of the businesses' life," added Mr Vacy-Lyle.
