Where are Aussie SMEs overspending?
About the Study
Small Business Loans Australia commissioned a survey of 250 small-to- medium business directors and decision-makers to discover whether SMEs are overspending unnecessarily, during a tough economic period and if so, by how much.
Business owners and senior decision-makers were asked to specify if they were overspending across 17 common business expenses:
- Payroll, salaries, & employee benefits
- Rent or mortgage
- Utilities
- Equipment (incl. computers)
- Maintenance & repairs in the workplace or on equipment
- Motor vehicles & their expenses (incl. petrol)
- Internet, cloud storage, software or subscriptions
- Inventory & stock
- External contractors and outsourced professional services
- Workplace furniture & supplies
- Marketing, advertising & sponsorship
- Insurance
- Business travel
- IT hardware (computers, servers)
- Interest and fees on loans
- Employees
- Workplace amenities for employees
Respondents also revealed how much they could be saving each year if they avoided overspending or cut unnecessary spending.
Small Business Loans Australia surveyed 210 owners and senior decision- makers across the full SME spectrum: micro (1-10 employees), small (11-50 employees) and medium-sized (51-200 employees), as well as a small percentage of large businesses (more than 200 employees).
What areas are SMEs spending too much on?
Small Business Loans Australia found that 86 per cent of SMEs are overspending on at least one expense. SMEs felt they were overspending on insurance the most - chosen by 28 per cent. Utilities was next, chosen by 26 per cent.
Next was rent and mortgage (chosen by 20 per cent); followed by marketing, advertising & sponsorship (17 per cent); external contractors and outsourced services (16 per cent); and payroll and employee benefits (16 per cent).
Fourteen per cent overspend on travel, 13 per cent on employee head count, 12 per cent on inventory and stock, 10 per cent on loan interest and fees as well as maintenance and repairs, 9 per cent on amenities, an equal 8 per cent on IT hardware, furniture and supplies, and 7 per cent on equipment and computers.
Thinking about the times that your customers have paid you later than your payment terms, have any of those late payments had negative impacts?

What areas are SMEs spending too much on? By State.
Businesses from NSW are most likely to overspend overall - with 97 per cent of NSW respondents admitting they overspend on at least one expense. This compares with 90 per cent of West Australian, 85 per cent of Victorian, 80 per cent of South Australian and 70 per cent of Queensland businesses.
Despite having the second lowest state-based median weekly earning, South Australian1 SMEs are most likely to say they were spending too much on payroll, salaries and employee benefits by a significant margin, chosen by 27 per cent of respondents. This was followed by an equal 19 per cent of NSW and Queensland businesses and 17 per cent of Victorian businesses. Only 14 per cent of West Australian businesses felt they were spending too much on salaries and employee benefits, despite Perth boasting the highest median weekly earnings of all of the capital cities.2
Across the major states, Victorian businesses felt they were spending too much on marketing and advertising, chosen by 23 per cent. This was followed closely by 22 per cent of NSW businesses. In comparison, only 13 per cent of South Australian, 10 per cent of Queensland and 5 per cent of West Australian businesses admitted the same.

What areas are SMEs spending too much on? By State.
Response | |||||
---|---|---|---|---|---|
State (%) | |||||
NSW | VIC | QLD | SA | WA | |
Payroll, Salaries, & Employee Benefits | 19 | 17 | 19 | 27 | 14 |
Rent or Mortgage | 21 | 23 | 20 | 33 | 10 |
Utilities | 38 | 21 | 20 | 20 | 29 |
Equipment (inc. computers) | 8 | 12 | 0 | 7 | 5 |
Maintenance & Repairs in the workplace or on equipment | 11 | 9 | 13 | 0 | 19 |
Cars & Other Motor Vehicles Expenses (incl. petrol) | 16 | 15 | 23 | 7 | 19 |
Internet, Cloud storage, Software, or Subscriptions | 16 | 17 | 5 | 29 | 18 |
Inventory & Stock | 11 | 8 | 23 | 7 | 14 |
External contractors and professional services we outsource work to | 21 | 21 | 8 | 7 | 14 |
Workspace Furniture, Equipment, & Supplies | 19 | 11 | 9 | 13 | 10 |
Marketing, Advertising, & Sponsorship | 22 | 23 | 10 | 13 | 5 |
Insurance | 32 | 26 | 30 | 27 | 14 |
Business Travel | 14 | 15 | 10 | 13 | 24 |
IT hardware (computers, servers) | 6 | 9 | 10 | 7 | 14 |
High interest and high fees on our business loans | 11 | 8 | 13 | 13 | 10 |
Employees (wages or employee headcount) | 13 | 17 | 10 | 0 | 24 |
Employee benefits and workplace amenities for employees | 8 | 11 | 5 | 0 | 24 |
My business doesn't overspend on anything | 3 | 15 | 30 | 20 | 10 |
What areas are SMEs spending too much on?
By business size.
Smaller businesses are more likely to overspend on their utilities: chosen by over a quarter (29 per cent) of micro businesses and 26 per cent of small businesses, and compared with 21 per cent of medium-sized businesses.
Larger businesses overspend more on employee benefits, chosen by 19 per cent of medium-sized businesses, and compared with 10 per cent of small businesses and 4 per cent of micro businesses.
However, smaller businesses are significantly more likely to conserve their spending to the necessary minimum: 25 per cent of micro businesses said they don't overspend on anything, compared with only 8 per cent of small businesses and 4 per cent of medium-sized businesses.

How much could SMEs save each year if they avoided unnecessary spending?
Small Business Loans Australia also sought to discover how much SMEs could save in their businesses if they avoided unnecessary spending. It found that a third (32 per cent) could save $100,000 or more in a year.
Specifically, 12 per cent could save $100,000-200,000, 10 per cent could save $200,000-300,000, 5 per cent could save $300,000-500,000 and 5 per cent could save more than $500,000.
Only 16 per cent of businesses couldn’t make any more cuts to their spending.

What areas are SMEs spending too much on? By State.
Response | |||||
---|---|---|---|---|---|
State (%) | |||||
NSW | VIC | QLD | SA | WA | |
Up to 50,000 | 32 | 28 | 53 | 33 | 43 |
$50,000-$100,000 | 21 | 15 | 3 | 13 | 14 |
$100,000-$200,000 | 14 | 11 | 10 | 13 | 10 |
$200,000-$300,000 | 11 | 11 | 5 | 13 | 14 |
$300,000-$400,000 | 5 | 4 | 0 | 7 | 5 |
$400,000-$500,000 | 5 | 4 | 0 | 0 | 0 |
More than $500,000 | 5 | 9 | 3 | 7 | 0 |
My business could not make any more monetary cuts | 8 | 17 | 28 | 13 | 14 |

How much could SMEs save each year if they avoided unnecessary spending? By business size.
Smaller businesses are more likely to already be operating at the minimum cost, chosen by over a third (34 per cent) of micro businesses and 6 per cent of small businesses - compared with only 2 per cent of medium-sized businesses.
Larger businesses are more likely to be spending $100,000 or more each year on costs that could be cut, chosen by 66 per cent of medium-sized businesses, compared with only 26 per cent of small businesses and 6 per cent of micro businesses.
