Economic projections are suggesting 2018 is shaping up to be a good year for small business. Consumer confidence reached a four year high in December 2017 and a recent white paper by NAB advises almost 45 percent of SME businesses are focusing on growth.
With Australia’s small to medium businesses equating to around 57 per cent of our GDP and employing close to 7 million Australians, there’s no denying small to medium enterprise (SME) is driving our economy. As such they are one of our most valuable resources, helping Australia cement its reputation as a nation of innovators and entrepreneurs.
Understanding the state of play for Australia’s SMEs is key if we want to understand the future financial well-being of the nation. NAB’s Moments that Matter report investigates the views of over 800 Australian SMEs, surveying their opinions on the challenges, opportunities and outlook for the growth of their business.
Whilst money may make the world go around, for Australia’s SME’s only 32 per cent ranked high profits as a measure of success. Surprisingly this was well behind other priorities such as financial management (58 per cent), positive word of mouth (56 per cent), productive staff (49 per cent) and happy staff (45 per cent). Only 11 per cent ranked large turnover as a measure of success.
SME is feeling optimistic about the future of their business.
Speaking of the ‘moments that matter’ many of the businesses surveyed talked about the importance of hitting milestones, from first big sales to hiring their first staff. For those small business owners engaged in a side hustle, these landmark moments were indicators of their business transitioning from an ‘experiment’ to a viable enterprise.
The report reveals on a whole, SME is feeling optimistic about the future of their business. This is also reflected in recent economic growth which has seen businesses across the service, construction, health and infrastructure segments continue to report improved conditions.
According to the Moments that Matter report Australian SMEs are hugely confident about the prospects of running a business in Australia.
The majority (73 per cent) also feel they’ve been successful in business, which appears to relate to their broader outlook on life – 86 per cent of those who feel successful in business also feel successful in life in general.
While SME business owners have a positive outlook, none more so than the Millennials. These digital natives are distinctly agile and focused on growth. 66 per cent of Millennials plan to expand their business in the next three years. Whilst one in five SMEs are run by millennials. And unlike their Gen X and Baby Boomer counterparts, Millennials are not intimidated by digital disruption. This constant connectedness is reflected in their business choices, 23 percent of Millennial SMEs are online-only businesses.
For those Millennial SMEs who are intending to expand, almost half will be looking to the digital side of their business to make it happen. 44 per cent plan to either start selling online or grow online sales to expand their business over the next three years (compared to just 28 per cent of everyone else).
Additionally, one in five plan (18 per cent) to invest in new technology over the same period (compared to 12 per cent of everyone else), and a similar proportion (21 per cent) plan to invest in new machinery or premises (compared to 12% of everyone else).
One thing all SMEs seem to have in common is the knowledge that in order to succeed they need to be adaptive to change.
As one SME owner commented: “You constantly need to adapt. I’ve been in business 27 years and I’d say every two years we’ve had to change in some way, either because of market forces or changes to industry regulations or tax/employment regulations.”
The information provided in this article is intended to be of a general nature only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on the information in this article, National Australia Bank Limited (ABN 12 004 044 937, AFSL and Australian Credit License 230686) (NAB) recommends you consider whether it is appropriate for your objectives, financial situation and needs. NAB recommends that you seek independent advice before acting on any information in this article.
Does your small business have not-so-small ambitions? Head to NAB to find more info, tools, articles and tips to help you achieve your business goals.
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