23 Aug 2017
Does size matter when it comes to culture?
Andrew Cornell |
Banks face challenges in communication and culture – and earnings - which come simply from being too big and complex.
7 Sep 2017
Unlocking the growth potential of Australia’s medium-sized businesses
It may be a surprise (it was to me) to read Australia’s medium-sized enterprises account for only 2 per cent of all local companies - but still employ a quarter of all workers. And they deliver one-third of Australia’s total business revenue - $A425 billion - annually.
Even more surprising – and much less positive - was between 2009 and 2016, the total number of medium-sized businesses decreased 39 per cent, from 83,355 to 50,808, across all industries.
It’s true the same slump occurred with large businesses but in that sector, at least, there are signs of recovery with an average 5 per cent year-on-year growth over the past two years. Meanwhile, micro and small business numbers grew 9 per cent from 730,881 to 798,065.
" Between 2009 and 2016, the total number of medium-sized businesses decreased 39 per cent." Tania Motton
That tells us medium-sized businesses - defined as having 20 to 200 employees - are either closing due to reasons such as a lack of succession planning, transitioning into the large business sector via mergers or organic growth or, more likely, leveraging ‘disruptive technologies’ to rely on less employees and therefore falling back into the small business category (5 to 19 employees).
This last scenario isn’t all bad news then. Through robotics, automation and other technologies like digital marketing and e-commerce, these businesses are utilising innovative solutions and outsourcing specialist services which helps them manage costs with more flexibility rather than attempt to rely on fixed-cost staff who play the role of ‘jacks of all trades’.
Online
Importantly, 84 per cent of Australian small-medium businesses now have an online presence to market and sell their products and services via a website, blog or social media account. And one in two are now receiving payments online.
It’s no wonder the contribution of digital technologies to the Australian economy is forecast to grow from $A79 billion in 2014 to $A139 billion in 2020, representing growth of more than 75 per cent.
Insights identified
At ANZ’s recent In Business Series forum in Melbourne we looked at analysis showing that while medium-sized businesses are often labelled as risk-averse or slow-moving, when compared with small and large businesses they are typically resourced and agile enough to take advantage of emerging growth opportunities.
But while these attributes present a genuine opportunity to drive a new wave of growth for Australia’s mid-market, many businesses aren’t sure where to begin.
That’s a key factor in why these businesses, a real engine room of the Australian economy, have started to show signs of decline.
Challenges
Some of the challenges facing medium-sized businesses include:
- A general lack of confidence and understanding of how to growth;
- managing the threat of cybercrime;
- effective succession planning to realise growth opportunities excessive regulation and compliance requirements, adding costs and time distractions;
- attracting and retaining talent, with employees often lured by large businesses;
- untapped data analytics for efficient inventory management and awareness of changing customer expectations and behaviours; and
- cost pressures such as rising energy and transportation costs.
What can be done?
Two key areas of opportunity for growing medium-sized businesses I’m passionate about are succession planning and accessing new markets - both online and through exports.
As many medium-sized businesses are successful family owned and operated businesses, having a succession plan is vital to growing the business and enhancing the capacity of employees.
Involving or sharing a succession plan with investors and lenders is also important as it helps mitigate financial and operational risk.
Meanwhile accessing new customers for products or services, either through online sales - both domestic or international - or by on-the-ground sales in new export markets, is a significant growth opportunity for agile and resourced medium-sized businesses.
At the Melbourne event we heard from Sealite CEO Chris Procter about how his focus on people capability and culture, along with constant reinvestment in product development and innovation, helped the company grow from manufacturing marine navigation aids in his father’s shed in Mentone to employing 130 staff and exporting marine, aviation and lighthouse products into the US, UK and Singapore.
Australia has a strong reputation in Asia, which is why businesses should look to leverage the free-trade agreements with China, Japan and South Korea.
There are export grants available, seminars offered by AusTrade and Department of Foreign Affairs and Trade, and at ANZ we offer a Be Trade Ready digital tool.
According to Professor Jana Matthews, ANZ Chair in Business Growth and Director of the Australian Centre for Business Growth at UniSA, medium-sized businesses need to be supported and challenged to:
- Teach CEOs/MDs and senior management teams how to lead effectively;
- identify companies with growth potential, challenge the CEOs and executives to find their ‘why’- and think bigger;
- generate media coverage of ‘role model’ CEOs of small and medium-sized businesses that are growing and scaling;
- provide more opportunities for peer discussion, sharing and learning among CEOs and executives; and
- encourage more story-telling and mentoring by those who have started, grown and exited companies.
Tania Motton is General Manager, Business Banking at ANZ. You can follow our online conversation via #ANZInBusiness
The ANZ In Business Series forum featured a panel moderated by business commentator Alan Kohler including Professor Jana Matthews, Mark Stone AM (Chief Executive of Victorian Chamber of Commerce and Industry), the Hon. Keith Pitt MP (Assistant Minister for Trade, Tourism and Investment) and ANZ Business Growth participant Chris Procter (CEO of Sealite).
The ANZ In Business Series is a national event series aiming to generate high-quality dialogue and action for Australia’s small and medium business sector.
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
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