What Happened In Q3? And How Did SMEs Deal With The Challenges And Opportunities?

The Australian economy has been dealt a tough hand over the past two years. However, looking at what happened in quarter 3, made that obvious. For the majority of Quarter 3 both of Australia’s largest capital cities were under restrictions and lockdowns. As a result this led to a contraction of the economy and created a plethora of challenges and opportunities for SMEs.

Household consumption will bear the brunt of the weakness in the third quarter, however vaccination rates to exit lockdowns originally cast doubt over the Reserve Bank of Australia’s optimism. Luckily for them, the vaccination rates rose quickly and optimism that the economy will bounce back was quickly renewed.

Despite the negatives, both the Australian share market and the property market showed exceptional new heights over Q3, as they have been doing most of the year. Mainly a response to global growth, fiscal stimulus and vaccine rollouts.

Now to look towards small and medium sized businesses. A Westpac survey confirmed that business owners are optimistic for the months ahead, but they still had to deal with some challenges and opportunities throughout the year.

SMEs had a tough time through quarter 3, and to help accelerate the recovery business owners want Australians to shop local. More than a third of business owners called this out as one of the best ways that could possibly help to recover from the impact of COVID-19 restrictions and lockdowns.

However, one of the greatest opportunities for SMEs through quarter 3, was that there was an increase in consumers buying Australian made goods and services. Everyone is hoping this trend continues to help aid recovery.

The main challenges faced by small and medium sized businesses during this period was the decrease in customers, and a reduction in sales, as well as supply chain disruptions. 80 per cent of small and medium sized businesses experienced an increase in the cost of doing business, through technologies and operating expenses.

All of these challenges then also lead to almost 50% of businesses experiencing staff shortages, with owners having to cover the shortfall. However, SMEs also have the opportunity to boost employee retention with 40 per cent planning to give a pay rise to their employees over the next twelve months. As a result invoice finance is likely going to see a rise, so that SMEs can have some assistance in keeping their cashflow strong and giving a pay rise.

This is also a tool to help to deal with the mental health of staff during this time, another challenge many SMEs are facing. As a tough and more unexpected challenge, the opportunity here will arise from how they deal with your staff during this time.

While this quarter definitely seemed to have more lows than highs, SMEs were persistent and showed resilience, while taking advantage of the opportunities that presented themselves.

With vaccination targets being hit across the nation, Quarter 3 will hopefully be the last period for a while where we see contraction due to the pandemic, and related lockdowns. Looking forward to Q4, SMEs are preparing for re-opening and positive movement in the economy.

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