Having survived the global pandemic, small business owners are now confronted with rising input and labour costs, forcing businesses to absorb higher expenses with thinner margins. Cost of materials and overheads survey data for the March quarter of 2022 from the South Australian Business Chamber William Buck Survey of Business Expectations came as no big surprise, with both indices up. Both indices have seen continuous growth since the start of the pandemic.
Higher than expected inflation figures have spurred the Reserve Bank to raise interest rates. Last Tuesday, the official cash rate was increased to 0.35 per cent. While election commentary has focused on the rising cost of living pressures, as the Chamber of Commerce and Industry in South Australia, we seek to highlight the risks of rising business costs.
The Reserve Bank’s decision to lift the cash rate to 0.35 per cent reflects the interrelated challenges of rising inflation, supply chain bottlenecks, and acute labour shortages faced by businesses across the country. Businesses across the nation are facing inflationary pressures and according to recently released ABS data, three in five businesses have experienced higher than usual cost increases in the last three months.
With genuine concerns around macroeconomic forces impacting upon business conditions, business owners will look inwards at their operating costs. The next Federal Government should focus on strategies to ease pressing supply-side constraints if we are to avoid even more significant risks to the economy in the future.
One sizeable input cost for many businesses is energy and the South Australian Business Chamber encourages business owners to periodically review their direct energy costs. If you own or operate a business, measuring your energy use is an excellent start to ensure you get the best deal by shopping around with retail energy providers. Yes, this can take time, but similarly, with your business insurance, make sure that you get the best deal based on your needs and business activity.
With attractive asset write-off provisions in place from the Federal Government, the South Australian Business Chamber further encourages business owners to reinvest into an asset that they can control; their own business. With the end of the financial year soon upon us, the old adage of spending money to make money has never been more true.
These are uncertain times for sure, certainly not what any of us want to hear after the heavy clouds of COVID-19 finally clear. But South Australian business owners are resilient. We have seen that over the past two years.
Meanwhile, the South Australian Business Chamber will continue to work closely with the Australian Chamber of Commerce and Industry, our peak body in Canberra, to advocate for better business conditions for all businesses. At a local level across South Australia, the South Australian Business Chamber is here for our members to support, encourage and provide advice. I encourage those who have not joined us as their peak employer body to give my team a call on 8300 0000. We welcome all business owners and operators.
