Economic climate impacting the mental health of over half of SME owners

New research commissioned by the Commonwealth Bank of Australia (CBA) has highlighted the significant stress faced by Australian small and medium-sized businesses (SMEs) amid the ongoing cost-of-living crisis.

The study showed that 52 per cent of business owners and senior managers have experienced a negative impact on their mental health over the past 12 months due to the challenging economic climate.

The research also uncovered that nearly two-thirds (65 per cent) of the surveyed businesses had to manage unexpected expenses in the past year, amounting to a staggering $7.3 billion in unforeseen costs. On average, these businesses have had to cover around $4,300 in unexpected expenses.

The most frequently encountered unexpected costs were equipment repairs and replacements (48 per cent), higher supplier costs (33 per cent), and increased utilities costs (32 per cent).

Rebecca Warren, executive general manager, small business banking at CBA, acknowledged the remarkable resilience of Australian small businesses during these tough times.

“Running a small business is hard yakka and right now, it’s tough. Rising costs of doing business and unexpected expenses can have a big impact when money is already tight,” Warren said.

“Our priority is to ensure those who need support understand what measures are available such as business overdrafts, invoice financing or flexible repayment plans.

“We have been reaching out proactively to hundreds of thousands of our small-business customers to check in on them, to make sure they are receiving the support they need, and that they are aware of some of our tools that can help them to run their business.”

Some of the top issues facing SMEs today

This research comes as brokers revealed the top concerns among SME clients following CreditorWatch data showing that thousands of Australian businesses have folded over the last six months due to tax debts.

CreditorWatch’s data revealed that 34 per cent of private businesses either became insolvent or closed voluntarily after defaulting on tax debts exceeding $100,000 and were overdue by more than 90 days.

Speaking to Broker Daily, Brenden Scotter, director of Commercial Point Finance, said the problem he’s observed is that clients need cash flow finance due to a “retraction in their industry, invoice payment times, cost of goods pressures, labour cost pressures, [and] ATO debt”.

“There are a number of secured and unsecured cash flow loans that are available, however, the client still needs to show servicing,” he said.

“This can be difficult as their existing cash flow is not strong and a number of the unsecured lenders rely on bank statements for their assessment.”

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