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Business owners like Rebecca Foley are bracing themselves amidst a turbulent economic landscape, with impending payroll changes adding to their concerns.
Foley, who co-owns Sprout Artisan Bakery in Brisbane, has seen relentless pressure on her profit margins due to unpredictable costs and new compliance requirements over the years.
“The recent surge in fuel prices has been particularly challenging,” Foley remarked.
Despite these challenges, Foley strives to maintain stable prices, resisting the urge to increase the cost of a takeaway coffee or croissant.
The world has evolved significantly since Sprout first opened its doors in 2014, presenting new challenges for small businesses.
“Every single price decision carries weight,” she said.
“We have people coming in saying, ‘Oh my gosh, it’s so ridiculous. How does a pastry cost $10?
“I really wish I didn’t have to charge $10. I wish I could charge $5 like I used to.”
The bakery owner is concerned the disruption of PayDay Super will upset her cashflow’s fragile balancing act.
Research from global small business platform Xero found that 84 per cent of owners worry that late payments from customers and stakeholders might prevent them from meeting this new obligation.
And 31 per cent of Australian small business owners expect to dip into their own savings to manage it.
“What we used to manage quarterly now becomes a weekly obligation, alongside our payroll,” Foley added.
“In a bakery business like ours at Sprout, we pay weekly.
“And revenue can fluctuate day to day.”
The challenges faced by Sprout aren’t limited to the hospitality industry.
Melbourne woman Jasmine Gescheit runs her fashion label Jasmine Alexa and said she began implementing PayDay Super early to avoid an abrupt cashflow headache in July.
“It just means I’m budgeting a little bit differently, as, especially in fashion, cash flow can be quite lumpy,” Gescheit said.
“We’re just trying to do the best that we can to tighten things up.”
The ripple effect of the economic uncertainty is being felt at every level of the supply chain.
Gescheit said retailers and suppliers have been slower to pay invoices, resulting in a bottleneck.
“All that falls on us at the end of the day,” she said.
“But it’s just the reality at the moment.”
Xero Economist Louise Southall said that, on average, small businesses in Australia are paid 6.6 days late.
“Which can have a flow on effect to wider business operations and the ability to invest in long term growth,” she said.
Extra pressures like regular superannuation obligations can turn this cashflow pressure into a “crisis”.
“It’s more important than ever for owners to focus on the things they can control, and cut out the noise of what they can’t,” Southall added
“The biggest challenge for small business owners is the unexpected.
“Owners who are well prepared for whatever the next unexpected shift is will be the most successful in the next 12 months.”
Both Foley and Gescheit have called on better government support and education for small businesses in Australia, particularly when new compliance laws arise.
“It would just be helpful to have a bit more education around it,” Gescheit added.
“I actually feel like I haven’t received anything or seen anything that helps educate the small business or the employer on how to tackle this.”
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