In the face of persistent inflation and recent rate rises, two thirds of small businesses are worried about their sales performance this peak sales season, with 30% of small businesses forecasting zero growth compared to the same period last year, according to a new survey from Australia’s first 100% carbon neutral parcel delivery service, Sendle.
The Sendle 2023 Small Business Survey shows a year-on-year dip in small business confidence, with 34% of small businesses confident about their peak sales growth this year, compared to 42% in 2022.
“Sendle’s 2023 Small Business Survey shows that many small businesses are feeling less confident about consumer demand this peak sales season, due to the impact of recent rate rises and cost of living pressures,” Sendle Australia managing director, Laura Hill said.
“However, small businesses are more optimistic about growth in 2024, most likely as they’re taking a number of proactive steps to attract new customers.”
The impact of inflation and recent rate rises is top of mind for small businesses, with over half (52%) worried about slowing consumer spending this peak sales season. Interestingly, they are more concerned about the financial squeeze on customers than their own businesses, with only 11% saying they are worried about the higher costs of doing business.
When forecasting business performance this upcoming Christmas sales period, 36% of small businesses are expecting significant sales growth, with 14% expecting between 50 to 65% growth. Small businesses in the key gifting product categories such as clothing and footwear, secondhand and vintage items, and toys, hobbies and games are most likely to forecast strong sales growth.
Interestingly, small businesses in the clothing and footwear and secondhand and vintage items categories are also most likely to forecast zero to no sales growth this peak season, along with books and publishing.
Looking ahead to 2024, customer acquisition is the number one concern for small businesses, with two thirds (66%) feeling anxious about bringing in new customers in the new year. This is a sizable jump from 2022, where only 22% of small businesses named customer acquisition as their top challenge. Managing cost pressures (53%) and keeping the business competitive (38%) were the other top challenges reported.
Despite a challenging economic outlook, the majority (84%) of small businesses are forecasting online sales growth over the next 12 months, with 36% forecasting up to 25% sales growth.
Many small businesses are looking to level up their social and marketing capabilities, with 61% planning to grow their social media presence and engagement in 2024. Additionally, 39% plan to invest in more marketing and brand awareness initiatives, to help them engage new customers and convert them into sales.
Other steps include updating their pricing strategy (41%), expanding into new markets (37%) and increasing shipping options (23%). Despite cash flow pressures, 69% of small businesses rank sustainability as a high or somewhat of a priority in 2024.