A cafe owner has opened up about the dark side of running a small business during the cost of living crisis, revealing he earns less than his allotted wage.
Adam Thomson, who runs the Dovetail Café in Brisbane’s Norman Park, said he works 60 hours a week to keep the restaurant open.
Mr Thomson said the long hours had taken their toll on him and his wife, with the couple forced to take a pay cut.
“The main thing we’ve had to do is try to cut costs wherever we can. So the quickest way to do that is to be very careful with salaries,” he said. Yahoo.
‘So, in reality, we have fewer people working here than we would like, and we have to work harder ourselves to physically make up for the numbers, doing a lot more work than we would ideally like.
“We pay ourselves less than the salary we are entitled to be here because, at the end of the day, it is simply a matter of survival. The last year has simply been a matter of survival.”
Mr Thomson said his small business is taking a hit from the Goods and Services Tax (GST), which costs him hundreds of dollars every week.
He said the cafe generates about $10,000 in revenue per week, but 10 percent automatically goes to the ATO before any expenses are paid.
Cafe owner Adam Thomson (pictured right) has urged the government to scrap GST to help small businesses in the hospitality sector.
Mr Thomson said the fee was a “coffee shop killer” and has urged the Government to scrap the tax to help small businesses.
“In this industry, almost everything we buy is exempt from GST, so we can’t really claim anything, but everything we manufacture we sell with GST,” he said.
The tax applies to most goods and services sold or consumed in Australia.
The amount is passed on to consumers when they purchase an item before the ATO claims 10 per cent of sales.
Businesses in Australia must pay GST if their annual turnover is $75,000 or more.
Mr Thomson said additional payments, such as taxes, were hitting small businesses’ bottom lines.
“You’re working harder than ever and you’re not making enough to pay the bills, and inevitably, small business owners just say, ‘I can’t do it anymore,'” he said.
CreditorWatch, a leading Australian business analyst firm, has predicted that one in 13 hotel businesses will fail in the next year.
CreditorWatch chief executive Patrick Coghlan warned that conditions will get worse for hospitality companies before they get better.
“The outlook for the hotel sector is unlikely to improve until we see an increase in consumer spending,” Coghlan said in a statement.
“That won’t happen until the effects of one or two rate cuts filter down to households. We don’t expect that to be felt until at least the second half of next year.”
Mr Thomson said the tax costs him hundreds of dollars each week (photo: Dovetail Cafe)
The average failure rate for all industries is 5.1 percent.
Businesses have also been hit hard by rising interest rates after the Reserve Bank raised the cash rate 13 times since May 2022.
The RBA has left rates at 4.35 percent from November 2023 and the next monetary policy meeting will be held on August 6.