Inflation, consecutive interest hikes, and other challenges of the past year have left an adverse effect that all small businesses are still reeling from. However, female business owners are faring worse, according to Entrepreneurial and Small Business Women Australia (ESBWA).
Data released by the ABS stated that there has been a 6324 decrease in the number of businesses with an entry rate of 131,616 businesses or five per cent and an exit rate of 137,940 exits, or 5.3 per cent, in the December quarter of 2023.
At the same time, experts predict insolvencies will hit post-global financial crisis levels in 2024 as the tax office chases a staggering $34 billion in small-business debt. This compounds matters for female small-business owners who are already facing challenging economic barriers, causing some to worry that many of these female small-business owners would eventually exit the market.
“Small business is an important pathway to financial security and job flexibility for women and contributes to jobs and innovation in Australia,” ESBWA founder and CEO, Amanda Rose, commented. “Yet, there are too many barriers holding small-business women back from thriving in the role. Without legislative change, we will see the number of female small business owners in operation dramatically drop from one in three to much less.”
Rose shared that the top issue small-business women face relates to the high cost of doing business are: taxes, including payroll tax and land tax; insurance; and other expenses that add up over time and eat into a business’s bottom line until the business owner’s employees are earning a higher wage than she does.
At the same time, she said that small businesses are only entitled to receive very modest small-business tax concessions from the ATO that has been focused lately on aggressively pursuing tax debt from under-pressure small businesses. On top of this, female founders receive less than three per cent of venture capital funding according to research.
ESBWA also pointed out that small-business owners are grappling with the ever-increasing cost of compliance concerning measures such as minimum wage, right to disconnect, sustainability reporting standards, and changes to the definition of ‘casual workers’, among others, creating more hurdles for small-business owners.
These are further exacerbated by delayed payments, rising cost of goods and operational expenses, and the slowing of consumer demand and increasing red tape, contributing to further cashflow issues
ESBWA has called for greater support to female small-business owners to see them through these challenges by enacting policy reforms aimed at simplifying the tax system, enhancing access to finance for female entrepreneurs, more financial concessions, and creating a more supportive regulatory environment that acknowledges the unique challenges faced by small businesses.
“We need to move away from the narrative that small businesses fail because of their own decisions,” Rose averred. “That is a dangerous and incorrect statement. The small-business community should not be left with the consequences of government decisions and then blamed when those decisions result in the collapse of their financial independence.
“The success of female small-business owners has widespread implications for the overall health of our economy and it’s time we help these women navigate these challenges more effectively,” Rose added. “Unfavourable operating conditions are especially fatal to family-run operations and fledgling start-ups. The last thing we want is an entire generation of female small-business owners being wiped out. If we want our community to thrive we must intervene early and often until they are in a strong enough position to withstand the economic headwinds.”
