Small businesses struggle as spending habits shift

Small businesses, especially in hospitality, are facing tough challenges as spending habits shift. A recent report from CreditorWatch reveals that closures in the hospitality sector have reached a record high. Last month, 9.3% of food and beverage businesses shut down, up from 7.1% the previous year. Rising costs amid cost-of-living pressures are making it hard for small businesses to attract customers. One example is Pia Richardson, who runs a cafe in Geraldton, Australia. Since December, her business has seen a sharp decline in customers. To get people through her doors, she has taken to handing out flyers. Rising prices for ingredients like milk and butter have hurt her profits significantly. Break-ins have added to her financial strain, making it difficult to stay afloat. Edward Davidson, owner of Davos Sim Racing, is also feeling the impact. His business, which offers simulated car racing, saw a large drop in visitors in recent months, with some days recording no customers at all. After a good start in 2020, he now faces a 60% drop in business. Davidson notes that many locals prefer to spend their money in bigger cities or online rather than supporting local businesses. Joanne Fabling, chief executive of the Mid West Chamber of Commerce, explains that high inflation and interest rates are affecting how much people are willing to spend. She points out that rising insurance costs are also a major concern for small businesses. Many cannot operate without insurance, and the increased costs make it even harder for them to survive. Despite these challenges, Richardson and Davidson urge the community to support local businesses. They believe small businesses can thrive if customers choose them over large corporations. Richardson highlights the need for people to be mindful of their decisions and support local establishments whenever possible.