A barely noticeable improvement may signal the worst is behind us

It recorded a microscopic improvement of 0.1 per cent this quarter. This is the first quarterly increase since August 2022 after a significant deterioration that occurred in the post-COVID period.

Over the past 12 months small business conditions deteriorated by 0.9 per cent, but the small increase we are now seeing, is showing some modest signs that conditions seem to be stabilising.

It shows that small and family business owners are digging deep to finds ways forward.

The Pulse also reveals specific areas where targeted policy and approaches, more attuned to the real-life challenges being faced and opportunities being pursued, would make a real positive difference.

It may be a barely noticeable improvement in the small business trading environment, but it does hopefully signal that the worst is behind us and a first step toward a positive shift in economic conditions for small and family businesses.

With some input-cost inflation starting to settle, the pressures on margins and profitability remain very real.

We are seeing a shift toward re-pricing to restore profitability and small business owners thinking about containing costs and what growth opportunities may be available.

The May Pulse highlights that cash flow is still a major concern for small businesses.

And while many feel the worst may be over, my office is seeing increasing numbers of requests for assistance with payment disputes.

This type of dispute, that often leaves a small business unpaid, can push the business to the economic edge, creating stress and heartache for the owner.

Being able to get behind the businesses doing the right thing by making employment, tax and supplier payments in a timely way, would be helped by a "good business pays" recognition.

This accreditation would honour those businesses meeting their reporting and payment obligations.

It is just one of the practical and positive "14 steps" ASBFEO has been championing to "energise enterprise".

The Pulse data also suggests that while there are still some areas of unease in the small business environment, small business owners are looking at many factors when thinking about their operating margins.

This includes reviewing input costs, pricing for their products or services, their range, what are customers saying and what opportunities are available to increase sales.

We are seeing an increase in small businesses researching importing and exporting opportunities in the May Pulse, with most of these enquires about engaging in trade across the Asia-Pacific region.

This is exciting because small and family businesses are now starting to think about what the future looks like for them and their business.

They are potentially making plans to grow their businesses and how best to tap into new markets.

Are we seeing the start of a gentle wind in the sails of resilient small business owners who have valiantly held on during an extended period of difficult headwinds? Or is it simply more remarkable relentlessness of enterprising women and men?

In the May Pulse, we have seen a modest increase in small businesses considering hiring extra staff.

A persistently tight labour market and difficulty finding suitable staff have been hampering recruitment efforts, but signs point to a shift in concern from availablity to affordability.

And let's not be swayed by the nonsense that above-inflation increases in payroll costs without productivity improvement is somehow helpful, at a time too many small business owners are battling to keep the lights on.

Small business owners have continued to report in this quarter how difficult it is to navigate the complex workplace laws, with most anxious about getting it wrong.

This is a real worry, and an example of why we need to make sure that we take a more proactive approach to "right-sizing" regulation.

Regulators and governments need to move away from the one-size-fits-all regulatory models. Regulations that are "right-sized" and fit-for-purpose will help small businesses meet their compliance obligations without fear.

Interestingly, small businesses are also looking to maximise their business opportunities by deploying digital capabilities and using artificial intelligence to source new and exciting opportunities to entice and delight their customers, and to grow their business.

Small business owners are also looking at how these technology tools can help them find more value and customers, and to navigate the complex compliance landscape.

Better digital know-how and practical enterprise-specific tech support that is focused on business systems, digital solutions and data management is another of the 14 Steps we have been advocating that will help support small and family business to grow and be competitive.

Many small and family businesses have been impacted by flood, cyclones and drought during the past 12 months. The Pulse highlights that temporary closure, lost income, and property damage remain issues for those businesses caught in natural disasters.

But we need to be mindful that these issues and any ongoing insurance difficulties are likely to affect these and many other businesses in the years to come.

So, our focus needs to be not only the immediate support and help needed, but on what those small and family businesses need in the months and years to come for a sustainable and durable recovery.

The ASBFEO Pulse combines traditional and non-traditional data to provide a powerful indicator of small business health right here, right now.

Harvesting alternative data such as internet searches to compliment official statistics gives a more nuanced understanding of the small business ecosystem.

It provides an earlier insight into changes in the trading environment, especially when conditions are shifting quickly.

The ASBFEO Small Business Pulse helps us to see into the corners of the small business community, while reflecting the reality of small business owners' everyday experience.

It highlights the "what" and "where" help, support and the removal of headwinds would be most relevant and useful.

ASBFEO's 14 steps to energise enterprise sets out the "how".

What the May Pulse tells me, and should tell us all, is - we must continue to energise enterprise.

We need to create conditions that encourage enthusiastic entrepreneurs with the spark of an idea to transform it into a business, to help a new business flourish and grow, to encourage investment and to employ that extra person.

Small and family businesses make a vital contribution to our national prosperity, economy, wellbeing and community.

We need them to be growing, employing, thriving and innovating to benefit us all.