New research has found that 1 in 5 Australian business owners took a hit to the bottom line in this summer’s heatwave, facing a double whammy as customers stayed at home and energy bills soared.
OnDeck’s Heatwave Healthcheck, conducted by independent research house YouGov, surveyed 300 small business owners about trading during the December–February summer period – which saw boiling temperatures of almost 50 degrees Celsius in parts of New South Wales and Queensland. The prolonged heat smashed records with nine consecutive days of heat, reaching more than 20 degrees above Sydney’s average.
The sweltering summer season created headaches for thousands of business owners, with almost 30% saying their business performed worse than the summer before and almost the same number unhappy with their level of trade over the period. Some reasons cited for a drop-in business were lower foot traffic as customers stayed indoors, it being too hot to work outside, heat and rain damaging stock, and hot and bothered customers being in a bad mood.
Mr Cameron Poolman, CEO of small business lender OnDeck, said the results reflect the number of variables small business owners must contend with to succeed.
“Extreme weather is one of many ups-and-downs that small business owners face. It shows why cashflow management is so important, but also why businesses need to be agile and respond quickly to opportunities as they arise.
“A business that sees an uptick in demand for swimwear, for example, may not have cash on hand for more stock, so we can loan them funds to stock up in as little as one day.
Mr Poolman said 1 in 4 OnDeck loans were used for purchasing stock or inventory, with business expansion, more staff, marketing & advertising the other top reasons.
“At OnDeck, we want to increase the number of businesses who are growing, and that’s what we’ve built our offering around,” he said. “Australian businesses need more flexible financing options that better suit their commercial circumstances.”
Fortunately, the rising temperatures weren’t all bad news for small business: 44% of respondents were happy with their summer trading period and 35% believe their business performed better this year than last. Businesses that cashed in on the heat put it down to several factors, from demand for summer stock through to customers coming in for free air-con.
OnDeck Customer case study: Carl Toole, owner of Bella Shutters & Blinds
Carl Toole has had a bumper summer, with customers flocking to the Helensburghbased business. He had daily comments from customers desperate to cool down their houses and cut down air-conditioning bills.
Plantation shutters and awnings were in ‘hot’ demand, as well as security screens that allow windows to be left open. He approached OnDeck for a loan in order to buy stock and keep up with demand.
Now in business for five years, Carl said this summer’s trading is not only one of his busiest years ever, but has also extended further, as the long hot days edged into autumn.
The business climate
The weather is not the only thing impacting Australian small businesses at the moment, according to the research. Of the 300 businesses surveyed, more than half (53%) believe Australia’s high cost of housing is having a negative impact on consumer confidence – and in turn the small business community.
“There’s no doubt that small business owners are impacted by various climates – economic, political and weather related.
“While it’s not possible to control everything, we can make life easier for business owners when it comes to how they access funding that helps them respond to changes in their environment.
“Business owners now have more options to fund their growth than just applying to the bank with extensive paperwork and waiting weeks for an answer. OnDeck is all about making it faster, easier and more accessible to access much-needed capital,” he said.