The rising costs of rent, utilities, fuel and transport, wages, and inflation that remains stubbornly above preferred market rates, is placing greater pressure on Australian small business owners.
Small and Medium Enterprises (SMEs) are the backbone of the Australian economy. In a report by The Australian Small Business and Family Enterprise Ombudsman (ASBFEO), Australia’s 2.5 million small businesses provided jobs for 5.1 million people and employed 42% of all apprentices and trainees – nearly double the amount supported by a big business. They also accounted for 32% of Australia's total GDP in 2021-22, which in money terms equated to $506 billion, or, half a trillion dollars.
If you’re a business owner or are considering starting your own enterprise, you know there are a number of day-to-day expenses associated with operating your business. What catches many business owners off-guard are the unexpected costs.
Here are 8 ongoing business costs you need to consider.
Lost in Time
One of the highest costs to business is work-related mental health conditions. Research from Safe Work Australia has highlighted the need for greater focus on employee mental wellbeing.
The median time lost from Mental health condition claims in 2020-21 (34.2 working weeks) was more than four times the median time lost across all claims (8.0).
The median compensation paid for Mental health condition claims in 2020‑21 ($58,615) was close to four times the median compensation paid across all claims ($15,743).
Workplace mental health has also seen higher instances of:
Absenteeism – The number of days taken off due to a mental health condition where the employer is paying for not having a person present to undertake the work.
Presenteeism – The number of days where a person is less productive in their role due to their mental health condition.
Creating and encouraging a mentally healthy work environment delivers many business benefits. This is in the form of increased employee engagement and productivity, as well as reduced employee turnover. You also quickly gain a reputation as an employer of choice helping to attract top-tier people.
The Cost of Compliance
Running a business in Australia requires an understanding of local, state, and federal regulations and compliance requirements for your industry. Whether it’s a construction license, liquor license, medical industry accreditation or tobacco taxes, the cost of legal compliance can financially impact your business. The challenge for SMEs is these requirements can be complex and confusing, which means you could unintentionally be operating a non-compliant business. Employsure industry experts can provide advice on compliance for your business.
Fix or Replace?
Depending on your business, essential assets such as office equipment or mechanical machinery is another cost you are likely to be aware of and factored into your operating expenses. While ongoing maintenance and servicing to address general wear and tear as well as damage can be budgeted for, an unexpected need of urgent repairs can cause a cost blowout. You may sometimes need to assess if the cost of repair is greater than replacement.
Why is there 5000 of those?
Inventory holding costs such as stock storage, insurance, and transport can severely cut into your profits if not taken into consideration. For hospitality businesses with perishable goods this cost can be even more critical and impactful.
Paying to Pay
In an economy that’s further moving to cashless transactions there are a number of different payment processing platforms available. Whether it’s a simple tap-and-go card transaction or a buy-now-pay-later option, there are often processing fees that need to be considered and factored into your pricing. It’s also important to know that the surcharge must not be more than what it costs your business to use that payment type. Overcharging on transaction fees could lead to a fine.
Welcome, New Employee 107
Employee turnover is costly, particularly for small businesses. When someone chooses to leave your business, you’re not just losing an employee, you’re losing their experience and knowledge. Recruitment and training require a large investment of time – selecting and interviewing prospective candidates, and money – advertising for a new employee then onboarding them correctly. Depending on your type of business and industry, it can also take several months for a new employee to become familiar with your business operations, procedures, and functions before they become productive profitable.
Access Denied
Phishing scams, data breaches, and cyberattacks are a constant threat, especially to small businesses as they don’t often have the security protocols of large organisations. This makes SMEs a preferred target of cyber criminals. The need to protect business critical and personal identifiable information (PII) has led to data security and cybersecurity becoming more important for small businesses. Investing in the right IT security is essential for every business.
Consultation Frees
Professional industry advice is invaluable for small businesses with limited internal resources. If you engage a business consultant or advisor, fees for these services can rapidly accumulate. With access to a free 24/7 advice line, Employsure clients can receive HR, workplace relations, or WHS advice from a team of industry experts.
Many people dream of running their own business. While it takes hard work and sacrifice, it is also exciting and rewarding and – if done successfully – can be highly profitable.
Being aware of the many different costs your business may experience and knowing who to turn to for the right advice and insights is the key to long-term success. If you need advice with Employee Relations or WHS support 24/7, the Employsure team is always here for you.
