Australian SMEs brace for fuel, power cost pressures

MYOB has published survey findings showing fuel prices and utility bills are the main cost pressures Australian small and medium-sized businesses expect over the next 12 months. The data also shows most owners expect the economy to weaken.

The interim results of the MYOB Business Monitor are based on a survey of 704 Australian SME owners and operators. It found 43% expect fuel prices to put significant pressure on their business over the next year, while 40% cited utilities, including electricity, gas and water.

Interest rates ranked next at 34%, followed by price margins and profitability at 31%. The figures suggest businesses are focused on day-to-day operating costs as inflation remains a concern across the wider economy.

Annual consumer price inflation rose to 4.0% in August from 3.5% in July, according to Australian Bureau of Statistics figures cited alongside the survey data. Housing, electricity and automotive fuel were among the main drivers.

Economic outlook

Business sentiment was notably downbeat. Seventy-three per cent of owners said they expect Australia's economy to decline over the next 12 months, including 31% who expect a significant decline. Just 9% expect conditions to improve.

That cautious outlook comes even as many respondents reported broadly stable trading. Forty-seven per cent said revenue was about the same as a year ago, 14% said it was up and 38% said it was down.

The results suggest many firms are not facing a collapse in turnover but are still preparing for a more difficult operating environment. Rising input costs, borrowing costs and pressure on margins appear to be weighing more heavily on expectations than current revenue trends alone.

Paul Robson, Chief Executive Officer of MYOB, said the findings show owners are preparing carefully for the year ahead.

"We continue to see many Australian SMEs demonstrate resilience despite pressure from rising costs and economic uncertainty.

"Payday Super and the end of card surcharging have also required an adjustment to how SMEs operate. These two shifts have taken place within a relatively short period. However, for the most part, our research suggests concerns around regulatory changes still sit behind cost factors including fuel, energy and interest rates.

"The businesses adapting most effectively tend to have the same mindset: they build compliance into everyday operations, stay close to their cash flow and use technology to give them a clearer view of how their business is performing in real time.

"Small businesses have always been practical. That ability to adapt, plan and keep moving will help them navigate uncertainty and work toward a successful year ahead."

Cost focus

Fuel and utility bills topping the list is consistent with recent inflation trends affecting households and businesses alike. For many smaller companies, those costs are hard to avoid or defer, especially in transport, retail, hospitality and trade-based sectors where energy use and travel are regular expenses.

Interest rates remain another prominent concern. With more than a third of respondents expecting borrowing costs to put pressure on their business, the survey points to continued sensitivity to financing conditions among firms already managing tight margins.

The appearance of profitability pressures near the top of the list underlines the challenge for operators trying to pass on higher costs without losing customers. In that setting, even businesses with flat revenue can come under strain if expenses rise faster than sales.

The survey was described as nationally representative and forms part of MYOB's biannual Business Monitor research into SME performance and attitudes. The interim findings cover profitability, cash flow, pipeline work, technology usage and views on government.

Among the headline figures, the split between stable and falling revenue stands out alongside the bleak economic outlook: nearly half of owners said sales were unchanged from a year earlier, yet more than seven in 10 still expect the broader economy to deteriorate.