The Business Chamber Queensland’s latest Pulse Survey of Business Conditions for the December 2022 quarter shows that retaining and recruiting workforces, wage costs and insurance costs have emerged as the most significant obstacles to business growth.

The survey has been measuring business confidence and expectations for more than 20 years, highlighting trends and predicting outcomes for businesses state-wide.

The latest report gives us a taste of what we can expect for the rest of 2023, and points to the current challenges and opportunities for businesses.

Overall performance is positive with 37 per cent of participants seeing an increase in sales and revenue in the December quarter, and 33 per cent reported stronger general business conditions. On the other hand 78 per cent of respondents also reported an increase in operating expenses, which can be mitigated through developing and sticking to a business budget.

Here are some of the key takeaways from the report.

Be workforce wise

The report highlights that the most significant impact on business growth in the post-COVID environment is the ability to retain and recruit staff.

Workforce constraints have been the leading key restraint on business growth since March 2022, followed by direct wage costs, with businesses’ ability to attract and retain quality staff struggling as a direct result of skill and labour shortages.

Salvatore Battaglia, Managing Director of Perfect Potion, says businesses will need to focus on culture to overcome this issue.

“We aren’t struggling with labour, which we put down to the incredible staff culture we have built,” he says. “This has provided us with a solid foundation of committed staff, who also know they are supported by upper management who will get on the tools with them when needed.”

Paul Milevskiy, Business Owner of The Torque Team, says that while labour shortages are a challenge, they also present an opportunity.

“If you can keep and retain high quality staff, it puts you in a strong position against your competitors, giving you an opportunity to grow your market share,” he says.

If your ability to hire and keep solid employees is being impacted, read our guide to recruiting and retaining staff.

Cost constraints

While recruiting and retaining suitably qualified employees has ranked as the highest constraint on business growth since the March 2022 quarter, this isn’t the only issue businesses are facing.

The report notes that businesses remain constrained by insurance costs, which have become a more critical constraint over the past year. Interest rates have also entered the top five factors constraining Queensland business growth for the first time since December 2010, as rate rises are anticipated to erode consumer and business spending throughout the year.

Rising inflation and costs of goods and services; increasing fuel and energy prices; and supply chain disruptions that are causing stock shortages and delays in both goods and services also acted as a drag on business confidence throughout the quarter.

But while labour and operating costs are at extremely high levels, and are likely to remain high for some time yet, the report suggests they may have reached their peak, with marginal improvements expected in the March 2023 quarter.

The report shows these ongoing labour shortages, along with rising wage and labour costs and the increased costs of operations due to increasing fuel and energy prices, are diminishing the confidence businesses have in their own profitability and the long-term economic conditions, even when business performance remains strong.

If you’re feeling the pinch, give yourself a refresher course in becoming financially literate.

Facing the future

While confidence has been shaken and many business owners are operating with caution, it’s still an exciting time to be doing business in Queensland.

“I’m both optimistic and pessimistic for the first time looking at business constraints in 2023,” Salvatore Battaglia says. “I’m feeling challenged, and we are often the first to feel the impacts in retail.

“The real game changer we need to see in the retail space is stronger and more understanding relationships with commercial landlords.”

Paul Milevskiy says he plans to work with The Torque Team to “make incremental changes, by slowly chipping away to stay ahead of the business constraints”.

In particular, he emphasises “excellent customer service as being the backbone of business success moving forward”.

Tom Eckersley, Managing Director of Eckersley Group, says he’ll be focusing on diversification to mitigate business constraints.

“We can no longer rely on having all of our eggs in one basket,” he says. “Diversifying our portfolio is the way to future-proof our business outcomes.”

If your business is feeling the pressure in 2023, the Brisbane Business Hub is focusing on curating a well-rounded events and workshops calendar to assist in mitigating these constraints. You can register your interest today.