Resilience through innovation – what small businesses can learn from the manufacturing industry

- October 12, 2022 3 MIN READ

New research from business management platform MYOB shows Australian mid-sized manufacturers are feeling optimistic and have experienced solid growth, despite rising costs and a looming recession. So what’s their secret, and what can other small and medium-sized businesses learn about business resilience? Kim Clarke, General Manager Enterprise at MYOB, explains.

With interest rates rising and economic uncertainty looming over us, it’s been hard to see the silver lining for small and medium-sized enterprises (SMEs) of late.

However, recent research of Australian mid-sized manufacturing companies offers a ray of light. It shows an industry that has embraced innovation and taken proactive steps to future-proof for times of recession and beyond, resulting in optimistic forecasts and healthy growth trajectories.

How the manufacturing industry continues to thrive

The MYOB Mid-market Snapshot surveyed 181 mid-sized manufacturing businesses (with 20-500 employees) across Australia, looking at revenue, work pipelines, business challenges, innovation and solutions. It made for – mostly – good news reading.

More than half of respondents reported increased revenue compared to a year ago, almost two-thirds (62 per cent) have more work than usual in the pipeline for the next quarter, and 54 per cent predict their revenue will be up in the next 12 months.

This is despite continuing to face a number of challenges. Of those surveyed, 55 per cent are feeling the burden of the increased costs of goods, half are experiencing disruptions to their supply chain, and more than a third (39 per cent) are seeing a rise in overhead costs.

So let’s break down the approaches that are working right now for manufacturing, and how these could apply to other businesses.

An innovative approach

The manufacturers surveyed have embedded innovation into their businesses, and are reaping the rewards.

70 per cent said they’ve invested in innovation over the past 12 months, and 83 per cent say innovation is a key priority for their business.

What does this innovation look like? It could be improving production lines (44 per cent), tightening or improving their supply chain (35 per cent), or expanding their services to customers and clients (33 per cent). Automation of manual processes was also on the horizon for one-third of respondents.

For other SMEs, it pays to consider how you could be investing in innovation for the long-term success of your business. Are there core business functions that could be streamlined or improved through innovation?

Man using digital tablet to control robotic arms

Taking action

If you aren’t moving forward, you’re moving backwards. This mantra rings true for Australian manufacturers, who are taking action to respond to challenges with new ideas and solutions.

The most important lesson for other SMEs is to take action. Because if you do what you’ve always done, you’ll get left behind.

Take a long-term view of the journey of your business and where you can, rise to the challenges and adapt the way you do business when needed; whether that’s streamlining operations, upskilling existing people or improving time-consuming processes. Having a clear vision for the future will help you ride the waves of uncertainty over the next few years.

Embracing change

Change can be hard, and manufacturing is an industry where change feels inevitable. Four in five (81 per cent) survey participants predict manufacturing will change rapidly in the next five years, with increased automation, heightened competition, more onshore manufacturing, and business takeovers and acquisitions.

Resilience in business means remaining responsive to fluctuating economic conditions, new challenges and customer demands.

For SMEs, it means taking a holistic approach to change internally – from production processes to business management systems. Take an honest look at your current processes and systems – are there things you could change for the better? Or inevitable changes you’ve been putting off? Getting on the front foot with change will put you in a stronger position. 

Delivering on digital

Digitisation is a core component of the innovation and change being adopted by mid-sized Australian manufacturers.

Nearly a third of the manufacturers surveyed want more than 50 per cent of their business digitised in future – and with competition increasing, those who adopt a digitally-fluent approach will gain a competitive advantage.

Digital business tools can also help SMEs facilitate a more iterative, creative approach to business, and help future-proof operations. They can streamline processes, reduce costs, empower customer service, improve cash flow and help businesses use data to make informed decisions about their future.

It’s exciting to see how the Australian manufacturing industry is using modern solutions to respond to change and challenges. I’m looking forward to seeing these positive changes continue to result in healthy revenue for the sector, and perhaps their approach could inspire you to try something new in your business, too.

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How mid-size businesses can adopt a growth mindset in uncertain times