Australian small businesses are concerned about the impact of the impending Federal Election and are delaying critical business decisions, which could impact job growth and investment, according to new survey results in the Westpac Small Business Report in collaboration with Deloitte.
The report reveals 50% of small businesses are worried or uncertain about the impact election policies will have on their operations, and they are choosing to delay decisions such as staffing and investment.
An estimated 40% of new jobs in the economy are created by small businesses each year, which was equivalent to 107,000 jobs in 2017-18. Similarly, small businesses invest an average of around $530 million each month, so if the net effect of the election was to delay some proportion of small business investment by two months, overall investment levels could decline for that period. This is coming at a delicate moment for the wider economy with growth already slowing and drags from the housing downturn expected to intensify.
Not all businesses are curtailing activity though. According to the report, the most profitable businesses are less likely to delay decision-making, with 56% stating the election does not affect their timing for hiring staff, compared to just 41% of other businesses; and 58% of this group do not consider the election when buying equipment compared to 40% of other businesses.
According to the report, the most helpful thing it could do to help small business is decrease energy costs, reduce regulation and red tape, and increase small business grants.
Small business advice for 2019
Tips from Ganesh Chandrasekkar, General Manager SME Banking, Westpac Group
Access grants: Significant support for small business is available via grants – both government and corporate. Despite this, only 17% of small businesses survey respondents have received a government grant. Check out business.gov.au/assistance/search to better understand what grants are available and how to apply.
Westpac also has a number of grants available, including our Businesses of Tomorrow program, which is recognising the businesses shaping Australia’s future, and Westpac Foundation’s Social Scale-up Grants for social enterprises that are creating employment pathways for vulnerable Australians.
Working with government: Government expenditure constitutes around 25% of GDP; it is also one of Australia’s largest employers. Working with government can be a good way to grow your business, whether it is through a contract or integrating yourself into their procurement supply chain.
With a Federal Election looming, now is also a great time to have your views heard. Contact your local MP about your views, needs and pain points.
Diversify: For better or worse, uncertainty is the new norm. However, there are always opportunities to grow, such as diversifying your operations to access new customers and new sources of revenue to future-proof your business. Consider how your product offering can be differentiated in the market to generate more profits by meeting the increasing needs of new customers, such as the environmentally or community conscious consumer.
Have a strategy for innovation in your business plan: Start with understanding your current innovation performance, then consider collaborating with your stakeholders to generate new ideas to help increase efficiencies and reduce costs. Learn from resources like Westpac’s Davidson Institute free Innovation Toolkit which helps all Australian businesses follow a simple process to capitalise on opportunities in a changing world.
Have a community mindset: Consumers are increasingly becoming more community conscious, so it’s no surprise that Australia’s most profitable small businesses are more community minded and engage in social actions. Consider how this change in customer behaviour can benefit your business and get involved with the community through volunteering, buying local inputs or sourcing materials ethically.
Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte’s approximately 244,000 professionals are committed to becoming the standard of excellence www.deloitte.com.au.