Sunil Bandi's motto is: when his customers are happy, he's happy.
He's been serving up Indonesian cuisine and coffee at his north Canberra cafe for four years, but the rising cost of living is taking a toll.
"I am just struggling because costs are going very high," he said.
Mr Bandi said raw materials are getting harder and harder to buy, some having doubled in price.
In the past year, he's seen a significant drop in the number of people coming into his cafe, and those who do are spending less.
"The cost of what I'm spending, so what I have to charge for the customers, they are not ready for it. You know why? Because they're struggling too," Mr Bandi said.
"I'm reducing staff … and I even changed our trading hours."
It's a sentiment shared in other parts of the city, with increasing operational costs combined with customers spending less putting many small businesses in a precarious position.
Customers 'coming in with a budget'
It's not just the hospitality industry that's feeling the pinch.
Thea Bollington opened her homeware and gift shop in Aranda eight years ago, but has never felt so much pressure as right now.
"I reckon this is probably our hardest year yet, even with COVID," she said.
"We have seen a drop in customers over the last 12 to 18 months."
Ms Bollington said she's had to adapt to changing customer habits like spending less.
"We are having to find a little bit more variety in products with different price points," she said
"Customers are really coming in with a budget and they are really thinking about what they are spending.
"There's no longer consistency in when people come in.
"[In the past] we could really guarantee weekends would always be busy, and more of a flow during the week.
"These days you can't pick it, from week to week it is really different."
Ms Bollington said it was worrying to see businesses struggling across the board.
"We have had a lot of makers in the last 12 months that have closed and it's scary," she said.
"If you can support small businesses, do it where you can.
"If you want them to be here and stay in your local area, spend when you can."
'We have had to pass on quite a few costs'
Al Evans and Paul Reed made the decision in 2014 to sell their cafe to become coffee bean roasters and suppliers.
Mr Evans said the number of beans they sell direct to cafes was down, while sales through supermarkets and online were increasing.
"Cafes are suffering a lot — rents are high, wages are high, and everyone is drinking coffee from home," he said.
"They might have their first coffee at home and maybe only have one out, where as before they would have like three coffees [out].
"A lot of people are staying home, they are working from home, so that is where we have seen an increase in online sales."
Mr Evans said bean costs have also increased "massively".
"We have had to pass on quite a few costs," he said.
"We tried to hold tight for about a year-and-a-half, but then everything became too much.
"There's not much you can do about it. If your base product is going up, you can only take so much."
Their business had between 40 and 50 staff when it was first established, but that has reduced to about 10.
Coffee machine repairer Paul Reed, who services Canberra and parts of regional New South Wales, said it's clear more people are opting to go without a cafe-made coffee.
He's been repairing machines for 16 years, and said he's been doing an increasing amount of home repairs.
"I got a lot of phone calls about people wanting them repaired or serviced because they're using them a lot more," he said.
He said cafes he services have been particularly quiet in the "last year or two".
Biggest challenge are high interest rates
Canberra Business Chamber CEO Greg Harford said business sentiment was currently "pretty gloomy".
"There's a couple of reasons behind that. First, it's costing people more to run their businesses. Second, customers aren't out spending," he said.
"Businesses are looking very hard at their costs and obviously looking at what they can do to get customers to get back in the door."
Mr Harford said stubbornly high interest rates were the biggest challenge facing small businesses.
"What we really need to see is the Reserve Bank start to bring interest rates down to inject a bit of confidence back into the consumer economy and to take the edge off the cost of doing business," he said.
"Customers just don't have as much money in their pockets to get out and spend as much as they normally would be."
Mr Harford said nearly two thirds of businesses had told the Business Chamber that they did not hit their sales targets for the last quarter, while he said only 29 per cent felt confident about the future.
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