Small businesses on the frontline as global uncertainty and rising costs pinch

For Marcus Booth-Remmers, Easter guarantees a sugar hit in more ways than one.

From his cafe and factory in the Adelaide Hills, the chocolatier has spent the weeks leading up to the holiday period busily handcrafting and selling a range of specialty chocolate eggs, bunnies and bilbies.

“It is one of the absolute busiest times of the year for us,” the Red Cacao cafe owner says.

“The Easter period equates for up to a third of our yearly trade, so it’s really one of our peak periods.”

He says the boost in sales is welcome after a year of challenging business conditions.

Mr Booth-Remmers says he has tried to avoid passing on increased cocoa costs to his customers, amid a global shortage of the essential chocolate-making ingredient.

Meanwhile, the closure of a nearby supermarket has changed foot traffic along the main thoroughfare in the area where he trades.

While Mr Booth-Remmers says the public’s appetite for high-end chocolates shows no sign of waning, ongoing cost of living pressures have prompted some of his customers to spend less in his cafe.

“Probably in the last nine months or so we’ve really felt it,” he says.

“[People] might come in for their daily coffee still, but leave off the extra treat on the side.”

Compounding the situation is a feeling of growing unease surrounding the fast-moving trade war between the US and China.

Mr Booth-Remmers’s small business is not directly impacted by the situation, but he says his customers have been talking about it.

“The disruption that the US is creating is real for some customers,” he says.

“It’s just uncertainty — people are not sure what to expect.”

‘Snowballing’ ingredient prices push up costs

In Melbourne, cake maker Matilda Chambers has taken to social media to remind customers to be “kind to your local bakers” amid the cost-of-living crisis and economic uncertainty.

Like Mr Booth-Remmers, Ms Chambers’s business has been affected by shortages of ingredients such as cocoa and eggs.

“I have found in the past year a lot of our products have been going up — some as much as 50 per cent — which really impacts how much we can sell the cakes for,” she says.

“It sort of snowballs because customers don’t have the money at the moment to be paying for cakes that are too expensive, so it’s really hard to find the middle ground with a selling point that works for us and them.”

Ms Chambers says many of her recent sales have been on the “lower end” of her pricing scale, with customers less likely to order elaborate cakes and instead opting for simpler designs.

“People are conscious of what they’re spending overall — especially when it’s something like a cake where it’s more for enjoyment and not a necessity as much,” she says.

Rising costs impact retirement plans

The cost of doing business is also weighing heavily on Dan Keast’s mind.

He and his wife Tanya have spent more than four decades running DTK Textiles — an Adelaide-based wholesale business which sells printers for the clothing industry and produces commercial transfers for promotional and sports clothing.

He says in recent years he has faced “significant” increases in rent, insurance and power costs, which he sometimes struggles to absorb in pricing.

“Sometimes you’re saying ‘no’ to orders, which otherwise you would have been able to take on and make a reasonable profit,” he says.

“The current climate is not a good climate for engaging in selling a business.”

A report released by the Australian Chamber of Commerce and Industry last July found 45 per cent of the small businesses surveyed considered leaving or closing their business in the 12 months prior.

“If these businesses do end up closing, more than one million small businesses will disappear, resulting in job losses for over two million Australians,” the report states.

Mr Keast says about two years ago he reduced his workforce from six to five employees, but within a year he was spending more on wages than before.

He says he and his wife are both currently working 60-hour weeks but are hoping to retire soon.

“We tend to look every day for new projects, new opportunities, and to continue to reinvent ourselves to make our business more attractive for potential buyers.”