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Supply chain problems, skills shortages stifle SME rebound

Business

Small businesses are bouncing back from the pandemic but fresh challenges are emerging, a survey finds.

By Tony Zhang4 minute read
James Organ

Increasing supply chain issues and skill shortages are stifling a business rebound with the latest results from research firm ACA painting a mixed picture for SMEs.

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It found 58 per cent of SMEs reported supply chain issues and 45 per cent staff or skills shortages, despite many anticipating a stronger economy in the next quarter.

In another positive sign, the number of SMEs reporting a financial loss in April declined to 23 per cent, down from 31 per cent in March.

The result continued an upward trend for both turnover and profit since February, although ACA’s COVID-19 SME Research Tracker found 50 per cent of small business continue to report lower revenues than before the pandemic.

ACA research and Fifth Quadrant managing director James Organ said confidence regarding economic conditions had bounced off lows but SMEs were struggling with hiring staff and managing supply chains.

More than 33 per cent of SMEs [are] expecting a stronger Australian economy over the next three months, compared to only 20 per cent last month,” he said.

However, growth aspirations are being impacted as more than 58 per cent of SMEs report supply chain issues and 45 per cent staff and/or skills shortages.

Staff shortages and supply chain issues are broad based but the larger the organisation the greater the impact.”

Mr Organ said around 28 per cent of small businesses were currently recruiting and competition for talent remained fierce with 85 per cent of SMEs finding it difficult to fill roles.

Reflecting the tight labour market, the net change in employment since the pandemic began has dropped to -3 per cent in April, compared to -10 per cent in January,” he said.

“To ease recruitment challenges, more than half of SME decision makers believed migrant worker quotas should be increased.”

Mr Organ said it was positive to report the strongest level of optimism about business survival since the inception of the research. 

Only 12 per cent of SMEs were now very concerned about their future, compared to 17 per cent at the beginning of 2022.

With increasing costs and rising interest rates it was also not surprising that investment intentions across most categories are in decline and the demand for finance is subsiding. 

Only 11 per cent of SMEs indicated a need for additional finance over the next three months compared to 18 per cent in January,” Mr Organ said.

Mr Organ said around 30 per cent of SMEs were satisfied with the federal government approaching the election, but 31 per cent were dissatisfied.

The final weeks of the campaign and specific policy initiatives aimed at SMEs will be critical in capturing votes from business decision makers,” he said.

In summary, sentiment in April was robust despite challenging business conditions. 

SMEs continue to demonstrate resilience, but it will be interesting to see how rising interest rates and the outcome of the Federal election impact business confidence during May.”

Supply chain problems, skills shortages stifle SME rebound
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Tony Zhang

Tony Zhang

AUTHOR

Tony Zhang is a journalist at Accountants Daily, which is the leading source of news, strategy and educational content for professionals working in the accounting sector.

Since joining the Momentum Media team in 2020, Tony has written for a range of its publications including Lawyers Weekly, Adviser Innovation, ifa and SMSF Adviser. He has been full-time on Accountants Daily since September 2021.

You can email Tony at This email address is being protected from spambots. You need JavaScript enabled to view it.

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