ATO data shows the cost of doing business in Australia is steadily increasing

The cost of doing business has climbed steadily over the past few years, according to data from the Australian Taxation Office. Figures released by the ATO show Australian businesses spent $47.44 billion on rent in 2014, up from $45.99 billion the previous year. Meanwhile, in 2012, businesses forked out $42.41 billion on rent. Since 2012, […]

Broede Carmody 23 March, 2016

The cost of doing business has climbed steadily over the past few years, according to data from the Australian Taxation Office.

Figures released by the ATO show Australian businesses spent $47.44 billion on rent in 2014, up from $45.99 billion the previous year.

Meanwhile, in 2012, businesses forked out $42.41 billion on rent.

Since 2012, the number of businesses in Australia has remained relatively stable at just over the 2 million mark, according to the Australian Bureau of Statistics.

Superannuation expenses have also jumped slightly in the past two years, with Australian businesses collectively setting aside $32.15 billion towards superannuation in 2014, in comparison to $29.47 billion in 2013.

The ATO data also shows businesses are spending more on maintenance and motor vehicles in comparison to previous years.

Rent increases a “challenge” for retailers

Pana Barbounis, the founder of Pana Chocolate, told SmartCompany increasing rental expenses is a common headache for bricks-and-mortar retailers.

Pana Chocolate operates retail outlets in Melbourne and Sydney, as well as wholesaling its organic, raw chocolate bars.

“Rent does take a large chunk out of any business and makes it challenging,” Barbounis says.

“Your rent can go up, but potentially a competitor a couple of suburbs away doesn’t receive that and they can better control their prices.

“I always try to keep my rent a certain percentage below my turnover, but to get them [stores] in really good locations – such as the CBD – that’s a challenge.”

Barbounis says he would advise other business founders to spend time negotiating leases in order to get the best deal possible and to make sure the shopfront is the best fit for the business long term.

“Look at where you sit now and what options you have to move on if need be,” Barbounis says.

“It’s a barter. You might take over a site and the landlord doesn’t want a lot of rent. If you can renovate, that’s a better option than something that’s halfway there but you have to pay more rent for it.”