Australian SMEs tackle skill shortages with new strategies

A recent report has highlighted the ongoing challenges faced by Australian small business owners due to skill shortages.

According to research conducted by Localsearch, 65% of small and medium-sized business (SMB) owners in Australia are feeling pressure from skill shortages, while 25% of these businesses report they have not recovered from the economic impact of COVID-19. The revelation is part of the Localsearch State of Small Business Report 2024.

The survey also discloses that more than half (53%) of small business owners feel they lack adequate resources and skilled staff to meet business demands. A significant 78% of SMB owners express a need for more skilled workers. Furthermore, the report reveals an encouraging trend where some businesses are implementing strategies to enhance operational efficiency and employee satisfaction.

To address the skill shortages, a quarter of these businesses are opting to increase salaries to attract high-demand talent. Another 25% are hiring more junior staff with plans for training them in the required skills. About one-third of businesses are concentrating on hiring based on potential rather than existing skills, prioritising personality and work ethic over experience. Work-life balance improvements, including flexible work hours, remote working options, and social activities, are being embraced by 21% to retain and attract employees.

The findings indicate that the skill shortage issue is easing compared to the previous year's data. In 2023, 72% of business owners cited a lack of workers with relevant experience, a figure that has dropped to 46% this year. The percentage of owners saying there is insufficient staff to handle demand has also decreased from 50% to 29%.

Wes Graham, Head of People at Localsearch, commented on these challenges and the adaptability shown by small business owners, stating: "While it's encouraging to see some improvement in the availability of skilled workers compared to last year, small business owners are still navigating significant challenges when it comes to finding and retaining the right talent."

Graham continued, "Skill shortages don't just impact day-to-day operations—it also creates additional pressures, forcing business owners to wear more and more hats. What we're seeing, though, is a remarkable adaptability among Aussie small business owners. By prioritising potential and work ethic over experience and investing in upskilling junior staff, many are laying the foundation for long-term resilience and retention."

He further added, "At Localsearch, we're committed to supporting small businesses through these challenges by providing tools and strategies that allow them to work smarter, not harder, so they can focus on what they do best—growing their business and supporting their local communities."