Small Business will be impacted by the Federal Budget 2024-25 well beyond the specific items targeted for Small Business in the Budget.
The Budget Overview document (www.budget.gov.au) lists $641.4m in small business initiatives:
- Improving Cash Flow, by extending the $20,000 instant asset write-off for a further 12 months.
- Easing Cost pressures and Administrative burden through $365 energy rebates to approx. 1m small businesses; abolishing 457 “nuisance tariffs”; and $10m additional support to small business employers administering the Paid Parental leave scheme.
- Supporting confidence and resilience in the small business sector through allocation of $41.7m over 4 years for:
- Supporting the Payment Times Reporting Regulator ($25.3m over 4 yrs.).
- Providing financial counselling and mental health support for small business owners ($10.8m over 2 yrs.).
- Implementing the Government’s response to the Review of Franchising Code of Conduct ($3.0m over 2 yrs.).
Supporting unrepresented small businesses through the Australian Small Business and Family Enterprise Ombudsman ($2.6m over 4yrs.).
Whilst these initiatives offer some benefits at the operational level, they do not offer ‘hand outs’ for small businesses that will ensure them viably in the current economic conditions. Provided the Budget addresses inflation and eases cost of living pressures, the tough conditions may improve somewhat but as always, the health of small businesses will depend on their ability to find profitable opportunities and deploy strategies to effectively compete.
According to the Budget overview, “Inflation is the primary focus of the Budget in the near term”. The focus is on ‘responsible economic management’ to return another relatively modest ($9.3 billion) surplus.
Small businesses may benefit by focusing to take advantage of the initiatives that the Government is taking to:
- “Ease cost of living pressures.
- Build more homes for Australians.
- Investing in a Future Made in Australia.
- Strengthening Medicare and the care economy.
- Broadening opportunity and advancing equality.”
To take advantage of the Government’s stated initiatives, small business needs to look for the market opportunities that the ‘Initiatives’ create in their industry sector.
The initiatives to ease cost of living such as tax cuts, energy bill relief, waiving a proportion of student debt, increasing rent assistance to nearly 1 million households, and enabling some cheaper medicines have the potential to enable more discretionary spending across all sectors with small businesses that make themselves attractive to customers ahead of their competition.
97.5% of Australian Businesses are Small Businesses, with half of these being in 4 streams: Construction (18%); Professional, Scientific and Technical Services (13%); Rental, Hiring, and Real Estate (11%); and Transport, Postal, and Warehousing (8%).
The focus on building more homes and infrastructure offers significant opportunity for the 18% of small businesses in Construction and the other industries that offer services to that sector. Similarly, the focus on renewable energy and higher education reform creates opportunities for small businesses, as does the initiatives in the Care sector. The canny small businessperson will analyse the Budget to look for opportunities in their sector, then devise strategies to capitalise on them.
In summary, the 2024-25 Budget provides some positive indicators that economic conditions will ease; however, small businesspeople need to tailor their strategies to take advantage of targeted opportunities that it may create whilst ensuring their businesses are operating as efficiently as possible in what will most likely still be tough circumstances.
For more Business ideas for success, listen to the “CEO Thinking” podcast using Apple or Spotify. For specific mentoring and advice, contact the author.
Philip Belcher MBA, FAICD, FIML is a specialist CEO Leadership, Strategy, and Execution Advisor and Principal of LSE Consulting Pty Ltd.
www.lseconsulting.net.au,
philip@lseconsulting.net.au
