A new report from Localsearch – the marketing solution for small businesses – today reveals 65% of Australian small business owners are experiencing pressures due to skill shortages, with a quarter reporting they still haven’t bounced back from COVID.
To combat this, Australian small business owners are adopting a variety of tactics to improve business efficiency and employee satisfaction. A quarter (25%) of small businesses are offering higher salaries to in-demand talent, a further quarter (25%) are taking on more junior staff with the intention of training them, a further third (33%) are shifting their focus to potential over skill and hiring based on personality and work ethic instead of experience and a quarter (21%) are boosting work/life balance incentives like work from home days, flexible working hours and social activities.
The news forms the second part of Localsearch’s annual State of Small Business Report, shedding light on the struggles Australian small business owners are up against.
When compared to the same questions asked of small business owners in 2023, fewer small business owners are reportedly struggling with skilled labour shortages. In 2023, a staggering 7 in 10 (72%) small business owners cited that there weren’t enough workers with relevant industry experience whereas less than half (46%) said so this year. To this end, the skills shortage epidemic is improving but many are still struggling.
Further, in 2023 half (50%) of respondents claimed there was not enough staff to keep up with demand and more than half (56%) said there was a lack of experienced staff to manage the business’s day-to-day operations. This year, those figures are 29% and a third (36%) respectively – again, an improvement on last year.
“While it’s encouraging to see some improvement in the availability of skilled workers compared to last year, small business owners are still navigating significant challenges when it comes to finding and retaining the right talent,” said Wes Graham, Head of People at Localsearch.
“Skill shortages don’t just impact day-to-day operations—it also creates additional pressures, forcing business owners to wear more and more hats. What we’re seeing, though, is a remarkable adaptability among Aussie small business owners. By prioritising potential and work ethic over experience and investing in upskilling junior staff, many are laying the foundation for long-term resilience and retention.”
“At Localsearch, we’re committed to supporting small businesses through these challenges by providing tools and strategies that allow them to work smarter, not harder, so they can focus on what they do best—growing their business and supporting their local communities.”