The vast majority of SMEs (86%) admit they are overspending in many areas of their businesses, according to a new survey commissioned by business loan comparison site, Small Business Loans Australia. Specifically, close to one-third (32%) of SMEs could save over $100,000 in a year if they reduced unnecessary spending.

The respondent pool of business owners and senior decision-makers were asked to specify if they believed the business is overspending, and by how much, across a list of 17 expense categories.

Small Business Loans Australia found that 86% of Australian SMEs are overspending on at least one expense category with insurance topping the list, with 28% of respondents admitting they believe they spend too much, followed closely by utilities (chosen by 26%). 

One in five (20%) businesses believe they spend too much on rent or mortgage, and 17% spend too much on marketing, advertising and sponsorship. An equal 16% overspend on external contractors as well as wages and employee benefits, while 14% spend too much on business travel, 13% on employee head count, 12% on inventory and stock, an equal 10% on loan interest and fees, as well as maintenance and repairs.

Meanwhile, 9% said they spend too much on workplace amenities, an equal 8% on IT hardware, as well as furniture and workplace supplies, and just 7% on equipment and computers. 

Smaller businesses are significantly more likely to be wiser with their spending, with one-quarter (25%) of micro businesses believing they don’t spend too much on anything. This compares with only 8% of small businesses and 4% of medium-sized businesses.

Small Business Loans Australia also sought to discover how much SMEs could save if they avoided unnecessary spending. Almost two-thirds (63%) said they could save more than $50,000 a year, one-third (33%) indicated they could save at least $100,000 a year, and one in five (21%) could save more than $200,000 a year. Just 16% of businesses said they couldn’t make any monetary cuts.

Small Business Loans Australia founder and managing director, Alon Rajic said, “SMEs make up 97% of the Australian business market, so it is concerning to see that the majority are spending such significant amounts unnecessarily as the economy prepares to slow down. Instead, businesses could look to build a cash buffer should their sales slow over the next year.

“Downsizing their workplaces if they offer a hybrid working arrangement, switching insurers and utility providers, and refinancing business loans for a better deal could help make significant changes to their yearly spending.”