Jay Patel has always been accustomed to running his Indian grocery store for long hours. However, now he says he can't even afford to take a day off. To lead his small business, Desi Bazzar, through Australia's cost-of-living crisis, Mr. Patel is now working seven days a week, demonstrating his commitment to keeping his business afloat.
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03-15, 2025Mr. Patel confessed, "It's affecting my personal life, but I have to do it because I've invested a lot in this business." He stated that the past two years have been the most stressful period in his 15+ years as a business owner, even more so than when he first started the grocery store. Mr. Patel, who immigrated to Australia from India in 2007, described feeling pressure from both costs and revenue. This dual pressure is making it difficult to maintain profitability.
At his store in Gungahlin, a culturally diverse northern suburb of Canberra, customers are reducing their purchases of non-essential items, including during festivals like Diwali, which are typically peak sales periods. "They are budgeting, planning their spending and where they are spending… they are more selective now," Mr. Patel said. In January, his sales were down 40% compared to the same period last year. At the same time, costs such as electricity and rent are constantly rising, squeezing his profit margins.
"These fixed expenses are things we can't control," he said. "We need to reduce casual staff. I need to work longer hours." Many of Australia's 2.6 million small businesses are facing the same predicament after soaring inflation and rising interest rates weakened consumer spending. Economists say the operating environment for retailers remains tough, and it is expected to take years for workers to recover their pre-pandemic spending power, impacting small business revenues.
Observers also say that this situation exacerbates the challenges faced by immigrant entrepreneurs, who are estimated to own one-third of Australia's small businesses. They argue that while these business owners have experience that helps them adapt to tougher economic environments, it is still necessary to connect them with support and advice. "Everyone is struggling," Mr. Patel understands why his customers are reducing their spending. He is feeling the same financial pressure at home due to higher mortgage rates.
Despite his increased operating costs, he says there is a limit to how much he can raise prices at his grocery store. "Everyone is struggling in this situation now," Mr. Patel said. Andrew Grant, an associate professor at the University of Sydney Business School, said that raising prices could create other problems for small businesses. "It will make it harder for them to attract new customers, or potentially make them less competitive compared to larger organizations that can absorb those kinds of price increases," he said.
Meanwhile, a recent report by the Reserve Bank of Australia found that access to credit remains challenging for small businesses. The report stated that while many businesses built up cash buffers during the COVID-19 pandemic, some have already drawn on these buffers and are facing insolvency. Dr. Grant said that small businesses have fewer financing options compared to larger corporations. "It's not an easy situation when you start a business expecting the cost of finance to be low, and then for whatever reason the costs go up, and it's completely outside your control," he said.
Dr. Grant said that small business owners often need to take on more responsibilities and work longer hours to stay afloat. "They may need to work longer hours to get to a break-even level of profitability, or to a break-even income to pay off their loans," he said. While some business owners are working longer hours, others are coping with the tougher situation by shortening their opening hours. Cindy Tse's family started the Star Turn cafe in 2019, initially operating from 7:30 am to 10 pm, with 10 employees covering all shifts.
Due to a recent 50% drop in revenue, Ms. Tse said the cafe, located in Doncaster, a suburb in eastern Melbourne, has started closing at 5 pm and has reduced its staff by half. "We reduced fine dining to cut costs and focused on providing breakfast and lunch for the local community," Ms. Tse said. "We have to keep everyone happy and keep everything affordable." The business is also finding it increasingly difficult to retain employees, as they often leave for higher wages because they are also dealing with their own financial pressures.
"The staff turnover is so high now. If someone pays a dollar more, they'll leave," Ms. Tse said. In addition to her day job as a nurse, she also works at the cafe to help her family. "It's really hard," she said. Besides the increase in the cost of living, the number of people working from home has also reduced their customer base, impacting revenue, Ms. Tse said. She hopes that people will return to the office more often. "Businesses are under quite a lot of pressure."
Mr. Patel has faced tough situations before. After immigrating to Australia in 2007, he couldn't find work as a computer technician despite his professional experience in India, so he started running a small business. Farzan Fallahi, an immigration entrepreneurship researcher at the University of Melbourne, said that many immigrants start businesses out of necessity after facing challenges in the job market. She said that immigrant entrepreneurs utilize "psychological capital"—a combination of optimism, confidence, and hope that they bring with them when they immigrate—to overcome the obstacles they face when starting a business and succeed.
Dr. Fallahi said that these qualities will help them adapt to economic conditions. "They've already overcome a lot of barriers in coming here, bringing their family, dealing with visas," she said. "So the rising cost of living and other barriers are things that they can actually cope with." But she said that it is still necessary for governments and business associations to support immigrant entrepreneurs by holding social events and training programs to help break down cultural barriers and connect them with the wider community.
There is hope that the Reserve Bank of Australia's recent interest rate cuts, falling inflation, and new growth in real wages will encourage households to loosen their purse strings in the coming year. But Dr. Grant expects the situation will not ease quickly and says small businesses need to continue to adapt. "I don't think we're going to go back to extremely low inflation or interest rates in the short term." He said that business owners considering borrowing can maintain more options if they maintain accurate documentation and a good payment history.
"That's one of the most important things," Dr. Grant said. "Look at the sources of funding that are available, and if the costs have gone up, identify the areas of your business that you can focus on?" But the choices are often limited, and some small businesses hoping to weather the tough times are cutting costs by laying off staff, he said. Mr. Patel hopes to be able to weather the storm and is waiting for interest rates to continue to fall before he can start taking time off again. "I need to make more money, and for that I need to work hard," he said. "The situation is tough for everyone now, not just me. Other people are doing the same thing."
