Small and medium-sized businesses are focusing on strengthening their customer proposition, with 80 per cent planning to use one or more strategies to achieve their business goals and drive growth in 2024.
Small-to-medium enterprises (SMEs) are innovating and investing to respond to market challenges, with many planning to prioritise marketing or create new products and services, while also focusing on staff training and development, according to new research released by CBA today.
The research, conducted in partnership with YouGov1, is being released alongside CBA data which showed a positive trading period for SMEs leading into the festive season, with earnings increasing 5.4 per cent in the second quarter of FY24, compared to the first quarter of FY24.2
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Rebecca Warren, Executive General Manager Small Business Banking, said: “Despite a difficult environment posed by inflation, rising interest rates and workforce challenges, the research shows small business owners are planning to take proactive action to drive growth over the coming months.
“Our focus is on backing these businesses and the entrepreneurs that run them. We want to help them drive growth and set them up for success.”
The research shows that the top strategies SMEs plan to use to drive growth are investing in marketing (45 per cent) and staff (34 per cent). Other strategies included revising pricing (31 per cent), investing in new product and/or service development (31 per cent), and diversifying stock and the supply chain (13 per cent).
“An uptick in demand for marketing and communications services suggests businesses are intensifying their customer acquisition and loyalty strategies,” Ms Warren said.
“Greater priority is also being given to employee wellbeing and productivity with many focusing on strategies to retain current staffing levels and improve performance with training and development.
“All this is positive for workers and business owners alike, with flow on effects across the entire sector through supply chain and aligned sector ecosystems.”
While the future is looking brighter for some SMEs, a number of challenges remain.
Rising costs and rates were the top challenges cited for most SMEs (60 per cent), including rising input costs (41 per cent), and energy costs (35 per cent). Forty-two per cent of business owners also cited challenges with managing cashflow in the next 12 months. Only 20 per cent of business owners said they had staffing issues such as retaining staff (15 per cent) and attracting staff (14 per cent).
“We know many SMEs are innovating and investing to respond to challenges,” Ms Warren said.
“A lot of businesses, particularly in hospitality and professional services, are taking proactive steps such as planning to expand with new revenue streams by creating new products or services (31 per cent) or by targeting new markets interstate and overseas (27 per cent) in a bid to win more customers.”
Small businesses are also investing in new equipment and technology to boost their efficiencies and reduce costs.
“Energy efficient equipment such as electric commercial vehicles, and software including marketing and social media applications are high on the wish list for purchases 2024,” Ms Warren said.
“We are here to support businesses in their efforts, whether it be better managing cashflow cycles or investing to grow for the future.”
1The YouGov survey was carried out online to a sample of 529 Australian small and medium-sized business owners and senior decision makers between 21 December 2023 and 3 January 2024. The sample included 366 small businesses and 163 medium-sized businesses.
