Cafe owner Daen Xu and his wife Dana.Credit:SBS / Sandra Fulloon
Daen Xu owns The Wilkes café at Artarmon in Sydney’s north and is among many owner-operators struggling to keep the doors open.
Mr Xu, 48, lives on Sydney’s northern beaches with his wife Dana and their three children and says soaring costs andinterest rates are taking a toll.
“Both mortgage and business interest rates have gone up in the last few months, and it is putting us under a lot of financial pressure,” he says.
He says in recent weeks, the usually busy café is quieter, a downturn he blames on rising household costs.
Mr Xu says business is quieter this month.Credit:SBS / Sandra Fulloon
“Even though the COVID lockdowns are finished, business is quite slow. Most people are not going out.”
Mr Xu migrated as a student in 2000 from China’s Guangdong Province, and trained in hospitality overseas before opening his own cafe in Sydney.
However, with less revenue coming in, Mr Xu says he is now digging into savings to meet housing and business expenses.
“It is quite hard. If I can't make a payment, I have to move out of the house. So, I am now using my life savings to pay the home loan,” he says.
Adding to his worries, heavy rain has sent fruit and vegetable prices soaring again, adding to the cost of doing business.
Belinda Clarke, CEO of the Restaurant and Catering Association of Australia.Credit:Restaurant and Catering Ass
“We are seeing people who are just holding on to get to Christmas, they are at breaking point,” says Belinda Clarke, CEO of the Restaurant and Catering Association of Australia.
“Venues in major cities are especially doing it tough. Many people are still working from home, there are public transport cancellations due to rain, so restaurant owners don’t know how many customers they are catering for each day.”
A national skills shortage is a big part of the problem according to Ms Clarke, who says hospitality vacancies are rising constantly.
“There are 102,000 jobs available online in hospitality now. With 55,000 venues across the country that means, on average, each venue is looking for a minimum of two staff to join their workforce.”
Mr Xu says even if he could find workers, he would struggle to pay extra wages.
“I can't afford to hire more people because it is so quiet,” he says.
So, like many owner-operators, Mr Xu is doing extra hours to fill the gaps.
“I'm already working 12 to 13 hours every day. And sometimes I don’t take a salary at all. Yet I still have a family to support.”
It’s a common problem, according to industry groups.
“Four out of five businesses either don't pay themselves, or significantly underpay themselves or rarely pay themselves,” Ms Clarke says.
“So that's a huge number of business owners who are struggling. You can walk down any street and see signs in the café windows. Everyone is looking for staff. It is one of the biggest challenges that we're facing right now.”
Australian Retailers Association CEO Paul Zahra.Credit:Dan Gray / ARA
Australians are still spending, with retail sales up by almost 26 per cent in September compared with the same time last year. However, the ongoing lack of staff has forced many traders to cut opening hours.
“Some stores are not even able to open every day of the week and you're seeing stores restricting trading hours or not opening at all,” says Australian Retailers Association (ARA) CEO Paul Zahra.
“It is the biggest issue preventing retailers from trading at their full potential, with job vacancies increasing to 46,000 workers.”
The ARA says Australians living with disability, younger Australians and mature-age workers could be encouraged to fill the gaps.
“With the unemployment rate at 3.5 per cent, we need to look at innovative ways to address this shortfall.
“One solution would be to double the pension cap (recently increased by $4,000 annually) to allow more retirees to come back to work without their pension being impacted.” he says.
Gary Liang (left) and Michael Chen, at Salvage Specialty Coffee.Credit:SBS / Sandra Fulloon
At Salvage Specialty Coffee in Sydney’s Artarmon, owner Michael Chen has called on a friend Gary Liang who is semi-retired, to help out part-time.
“I can squeeze my schedule to work two extra days a week here,” says Mr Liang who spent his career in hospitality. “I am happy to help because it is very hard to get skilled staff, very hard,” he says.
“That affects many owners and leads to revenue going down, because you cannot provide the level of service customers deserve.”
The Council of Small Business Organisations Australia (COSBOA) is calling for a raft of reforms in the budget, to reduce red tape and boost business turnover.
“The government has to acknowledge that the cost of doing business is increasing. These costs include international freight and energy, rent and the burden of the debt from COVID-19,” says CEO Alexi Boyd.
“So, we are really hoping that there will be something in the budget for small businesses, in terms of relief.”
Ms Boyd also calls for innovative approaches to boost the workforce.
“We need a campaign to attract international students, skilled migrants and tourists back to Australia,” she says.
“A key point of that is offering permanent pathways to residency so people can see a long-term future as part of the workforce as a resident, and also possibly a small business owner.”
Mai Nagashima outside the family business in Artarmon.Credit:SBS / Sandra Fulloon
Importers face other challenges as supply chain disruption continues.
Mai Nagashima’s family owns several restaurants and a Japanese grocery business called Lucky Mart.
She says rising costs including electricity are eating into profits.
“Cost increases from wages to food bills, and even rent, means profit margins are getting lower and lower and lower.”
Reducing taxes is one way to ease the burden, says ARA CEO Paul Zahra.
“The ARA recommends that the corporate tax rate for medium sized business be reduced from 30 per cent to 25 per cent, so that all small and medium businesses up to a threshold of $250 million are on the same rate.
“At the current level, Australia’s corporate tax rate for small and medium sized businesses is amongst the highest in the developed world.”
With global markets on an increasingly perilous path, and government spending under review, Daen Xu can only hope his pleas are heard in Canberra.
“Hopefully we can get some help from the government because I am so tired. I don’t know how much longer I can't stay in business,” he says.
https://www.sbs.com.au/news/small-business-secrets/article/desperate-for-relief-from-soaring-costs-business-owners-look-to-tuesdays-federal-budget/93i44fufa
