The recent Westpac RFi SME Mindset Survey found seven in 10 small business operators believe it’s getting harder to run a business in Australia; a sentiment also echoed by the latest Westpac-Melbourne Institute SME Index which reported small-business confidence in Australia has fallen to the lowest level since June 2016.
To really flourish, small businesses need to re-invent themselves and make tough decisions about how they can future-proof their businesses. In other words, they need to discover their “second act”, which will revive this vital sector.
Thankfully, there remains a deep-seated spirit of entrepreneurship and resilience with many small businesses taking action to open doors and discover their “second act”.
Access to new markets
Small businesses who are exporting are more buoyant about their business’s growth. They are also highly active, are planning to enhance their products or services, and investing in new technology.
However, not all businesses find it easy or know where to start overseas trading with many revealing their biggest challenges are economic factors, understanding tax regulations, identifying overseas suppliers and knowing how to find customers. With the right advice and education, embracing digital channels, networking, and government support, small businesses will be able to capitalise on the opportunity for service exports.
Good news for manufacturers
A growing number of SMEs in the manufacturing industry reported an increase in the volume of activity and sales in the past 12 months. This sector has seen among the highest increase in revenue across all other SME sectors in Australia. In fact, 59 per cent of manufacturing businesses experienced an increase in revenue over the last two years. This strong growth is largely due to the sector’s gradual shift away from big production lines towards other activities in the value chain such as designing, recycling, and packaging.
Looking ahead, the next five years hold significant disruption in store for small businesses. And manufacturing SMEs are already taking positive steps to future-proof their business with 90 per cent looking to enhance or create new products and services.
Geared for disruption
The reality is that every Australian business is faced with disruption and change in some form, but small businesses are well positioned to adapt the fastest. Research tells that two-thirds of large businesses typically require more than one year to adapt to change but just 57 per cent of small businesses need that time.
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To help the sector move forward, we need to look closely at our approach to policies impacting the ease of doing business (i.e. reduction in red tape), as well as increase focus on improving education and awareness in defining business strategies.
The road ahead
Despite tough conditions, the sector is doing well and remains upbeat about the future as small businesses are taking action to influence their future conditions. More than a quarter of small businesses are also planning to expand their operations including enhancing their products and services and breaking into new markets. .
The small businesses that will be successful in the future are those that are adaptable and resilient, have diversified their offering and have unique ideas. The time is coming when small businesses will no longer be defined by their size – but their ability to respond to a changing, more competitive and global environment.
Source: Ganesh Chandrasekkar, General Manager, Westpac Small Business Banking