Small businesses in Western Australia are grappling with unprecedented challenges amid rising cost of living and economic instability. Soaring housing prices, increased energy costs, economic pressures, and overall inflation have significantly impacted operational expenses.
“Rising costs and a quickly changing landscape brings a multitude of challenges many SMEs don’t have the expertise or experience to overcome,” Pasquale Princi, Managing Partner at SEER Financial Group, explained.
These rising costs are squeezing profits and impacting budgets, leaving little room for reinvestment or growth. Meanwhile, economic pressures are changing consumer spending behaviour, where there is growing resistance from consumers to take on increased costs.
In addition, labour shortages have been compounded by wage pressures, with three or four wage rises in the last few years. “Small businesses can’t afford that to continue,” Mr Princi explained.
It’s what Mr Princi calls “the perfect storm” – and believes small businesses need to act now to not just survive these challenging times, but to thrive in the long-term. “Businesses need to act now, and they need the right type of advisors to help them. Delaying this transition may leave businesses vulnerable when economic conditions shift,” he said.
“Unfortunately, many small businesses don’t have the necessary expertise or business acumen to effectively navigate these challenges in the way some more experienced, or bigger businesses can,” he explained.
The truth is that many small businesses are not being adequately advised and are currently making critical mistakes that jeopardise their financial stability and long-term success. Some of these mistakes include failing to adjust their financial strategies for sustainable growth and not integrating their financial management with their overarching business strategy.
As the economic landscape shifts amid a volatile political and financial landscape, small businesses must rethink their financial strategies, embrace innovation, and partner with advisory accountants to navigate the current landscape effectively, according to Mr Princi.
Pasquale Princi, Managing Partner at SEER Financial Group
“Fundamentally, there’s a lack of proactive and holistic advice from accountants. What SMEs need is a business partner who can advise on best practice, help inform strategy and guide these businesses to long-term sustainable success,” Mr Princi explained.
Mr Princi is sending out an alarm bell to all small business to change their tact and transition away from traditional “behind-the-desk” accounting models to holistic advisory accountants who are equipped to help small businesses adopt a strategy for long-term success.
“They’re working with the same accountants, doing the same budgets and cash flows, because that’s what has always worked, rather than seeking new advice and challenging the norm,” he said.
Holistic accountants act as strategic partners, helping businesses navigate the current economic climate with a tactical focus on long-term growth. Traditional accounting practices, in comparison, tend to be more reactive and narrow-focused, limiting the ability of small businesses to adapt to changing circumstances.
Many traditional “behind-the-desk” accountants focus solely on compliance and reporting, rather than providing the proactive guidance needed to navigate today’s economic challenges, which is simply not effective in today’s changed landscape – because it is not enough. “Traditional advice does not allow you to see the whole picture or consider the impact of so many facets that have and are continuing to change. It’s simply not going to be good enough advice,” he said.
Mr Princi advises business leaders to proactively work with their accountants – especially now – and not to just work with them on “accounting and tax”. “We view tax as an outcome. Tax is the end-of-year discussion that we’ve already planned for because we had a tax planning meeting in March or April,” Mr Princi said.
He explains that the path to long-term success and resilience through challenging and testing times lies in proactive planning and strategic partnerships. “When we have a conversation with you as a client, we want to sit down and understand you as a person, your business, its purpose, and then strategise as to how we can help achieve or uphold that purpose, or achieve the mission or vision,” he said.
"We don’t try to be the masters of everything – we can help you with accounting, audit and tax, but we can also guide you to seek advice from the best experts and put you in front of the right people to get the right results.”
As upcoming elections loom and economic volatility persists, it is essential for small businesses to be financially and strategically prepared. Engaging with advisory accountants can provide the necessary insights to navigate these complexities effectively.
During these changing times, small businesses must innovate and seize the opportunity for business transformation or risk becoming obsolete. “You have to innovate, otherwise your business will be left behind. Stop being a renovator and start being an innovator,” Mr Princi said.
It is critical for business owners to be clear on their businesses practices and ensure it is aligned with who their clients are, which includes establishing sustainability practices. “This is really business transformation – it’s management and finances but it’s also looking at the future, the past, and the present,” he said.
The economic pressures facing small businesses today are significant, but they also present opportunities for those willing to adapt. By coupling traditional business practices with digital transformation and innovative solutions, businesses can better navigate the challenges ahead, according to Mr Princi.
