The 5 big issues facing business owners in 2024

As 2024 kicks off, Australia’s two million plus small business owners face fresh economic challenges and a whole new world of game-changing technology. Those are the findings of the second annual The Big Small Business Survey, conducted by five Australian business owners (including me), writes Katrina McCarter.

Overwhelm is a key issue. There are countless options to leverage new technology, including AI, and marketing trends make it tough to decide where to invest time and resources.

The 2023 survey found the top concerns of small biz owners are figuring out how to grow their business, find new customers and grow leads. Cash flow issues and rising costs remain a source of stress.

“We saw a clear message that the majority of owners want growth,” says co-author Jenn Donovan. “The struggle is seeing a clear pathway to achieve it.”

The good news?

Despite the daily stress of running a business, more than half of entrepreneurs love the flexibility of being self-employed, and the opportunity to make an impact in the world.

Despite facing challenges, many small biz owners still expect positive sales outcomes in 2024, and say their biggest opportunities are creating new partnerships and collaborations, systemising and scaling their business and increasing sales overall

341 business owners from all over Australia and around the world participated. Most (59%) were aged between 43-58 years old. A third had been in business for between ten and 19 years.

Here’s a deep dive into the five make-or-break themes small biz owners faced in 2023.

Staffing

With labour shortages, nearly 30% of business owners are still experiencing problems finding and hiring quality staff, down from 2022’s figure of 33%.

Business owners understand they need to ‘run lean’ by making sure the team is well trained, loyal and engaged, says report author David Jenyns. Flexible work arrangements have become increasingly essential to retain their best employees and reduce turnover.

The survey found this is the most popular employee retention strategy (30.21 per cent), followed by competitive salaries and benefits (14.37 per cent) and on-the-job training and mentorship (8.50 per cent), including in-house training and offline-education subscriptions.

“Businesses in 2023 are focusing on efficiency, staff development and adaptability to flexible work environments,” said Jenyns.

What’s the solution? While filling vacancies is becoming slightly less of a headache, small biz owners are still crying out for human resources support. Some say grants for training would make a difference to encourage people already on board to say for longer.

Pricing

Interest rates and the increased costs of doing business are on everyone’s mind. But in 2023, businesses were so scared of losing customers that they didn’t take action to reset their prices despite dwindling profits.

Report author Andrew Griffiths was “surprised” to see that while almost a quarter of businesses noted prices have gone up by between 10 and 20%, only 12.9 per cent of business owners have raised their prices by that amount.

For Griffiths, a “big” concern is the increase in costs versus an aversion to increasing prices means the profitability of many Australian small businesses is diminished, and could lead to a lack of financial resilience and “dramatic and catastrophic” impact if there’s a hiccup outside of what is already being experienced in the economy.

92% of biz owners saw an increase of costs over 2023 and 71 per cent responded to rising costs by increasing their prices, massively up from 32 per cent in 2022. But most (34.10 per cent) put up prices by between 5-10 per cent only.

The solution: “Business owners need to be shown how to increase their prices in a much more strategic and realistic way,” says Griffiths. “Fear of raising prices puts incredible pressure on business owners and their families.”

Marketing

The big takeaway: 56 per cent of small business owners surveyed find marketing overwhelming. Almost two-thirds are challenged by being consistent with marketing efforts, and over 46 per cent struggle with producing and delivering good quality content. Over 35 per cent don’t know which marketing strategy works best.

On debut in the survey, AI (eg ChatGPT) was used by more than half of the surveyed small business owners in their marketing. 33 per cent promote their business on social media several times per week and 10 per cent post multiple times per day.

“Business owners are facing the multi-pronged challenge of deciding on a strategy, implementing it and maintaining the work they do to market their business,” says report author Jenn Donovan. “They’re not achieving the returns they want.”

The solution: “Business owners struggle to find the time and access the support they need to work from the bottom up, by identifying goals then crafting a marketing strategy around them,” says Donovan. “The next step is to stay the course.”

Mental Health

Work is becoming synonymous with life and employers are facing the two-fold challenge of looking after themselves and others. That means in 2023, close to half (42.82 per cent) of small business owners said mental health has been a challenge.

34% of those surveyed noticed an increase in mental health issues in or amongst their team, and just under a quarter don’t feel equipped to deal with these issues.

The top three things giving small business owners sleepless nights are not having enough money, finding the line between work and family and managing rising expenses. “When you are physically and mentally at your limit, everything comes to a crashing halt,” wrote one respondent.

The solution: The figures highlight the importance of supporting the wellbeing of small business owners. Consider how many say the thing they worry about at night the most is the prospect of not being able to support their families. It’s a very heavy load to carry.

Technology

2023 was the year of AI, and this is not the time to stick your head in the sand.

“Things are just getting started,” says report author Dale Beaumont. “The businesses that succeed between now and 2030 will be able to adapt, shift and leverage new technology to reduce costs, produce at higher volume and stand out from the crowds.”

While 40 per cent of small business owners surveyed are concerned about the impact technology and AI is having on their business, 25 per cent are using AI tools in their several times a week (and almost 10% cent use it several times per day!)

A third of business owners believe technology will replace human roles in their business or industry within the next five years. “AI is here to stay and if you’re not using it, you won’t have a business in the future,” said one respondent.

The solution: “Many business owners are learning about what’s out there, integrating AI into their daily work flows. These are the ones who will thrive,” says Beaumont.

The picture emerging?

The most worrying result from The Big Small Business Survey in 2023 is the number of business owners who have failed to keep up with rising costs. In 2024, with pricing pressures persisting, clear strategies around pricing, staff retention and marketing will make all the difference to success and longevity.

Source: Flying Solo January 2024

This article by Katrina McCarter is reproduced with the permission of Flying Solo - Australia's micro business community. Find out more and join over 100K others https://www.flyingsolo.com.au/join.

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