Shifting Ideas

SMEs and the Economy

At one time or another, just about every Australian dreams of giving the boss the boot and turning their great idea for a small business into a reality. Often launched by eager entrepreneurs, small to medium enterprises, known as SMEs, maintain a powerful presence in Australia’s business landscape and economy.

According to the not-for-profit SME Association of Australia, there are around two million small businesses throughout the country accounting for more than 95 per cent of total business. “I think that those percentages are huge and significant in terms of how the economy develops not only this year but ongoing,” comments SME industry figure Garry Browne.

In July of last year, the Business Council of Australia made a plea for government intervention following signs of weakness from the SME sector in a stagnant business climate. “I think there was a lack of clarity on a whole host of issues, there was not one particular area,” remarks Mr Browne. “SMEs could not see a clear way out, the economy certainly was not in the best shape and it made one wonder what really could be done to lift the cloud that was hanging around.”

Following the plea made by the Business Council, Mr Browne acknowledged the importance that government agencies and departments play in cutting red tape and boosting productivity. There is a need for all levels of government to treat SMEs like partners by not delaying payments to improve cash flow – but dealing with the government does not have to be difficult. There are numerous resources and government grants available online that provide budding entrepreneurs and small start-ups with a boost. The issues of compliance and increasing regulation are a headache for many small to medium business owners but Mr Browne encourages SMEs to treat government agencies and departments like a customer. Find out who to address in contracts and how to negotiate better terms for payment and reducing red tape.

As chair of the NSW Procurement Industry Advisory Group, Mr Browne is involved first hand with interactions between SMEs and the government. “The role very simply is to encourage businesses to engage with the NSW government. You would see from much of the material that’s in the public domain that there is an interest to develop small to medium enterprises to the point that they can do business with the government.” While great progress has been made so far, Mr Browne says that there are still plenty of hurdles to overcome. “It’s a continual process, it doesn’t happen overnight. It’s one that you really need to work on but it’s one that is definitely happening.”

Mr Browne wears many different hats professionally as the CEO and Managing Director of Stuart Alexander and Co and the Governor of Rotary District 9675. It was through his work with Stuart Alexander (a leading company in the Australasian fast moving consumer goods arena which imports, markets and distributes premium brands) that Mr Browne first got involved with the SME sector. “We’ve always had a high representation in our customer portfolio of the small to medium enterprise and one gets to have empathy and a position of understanding with these types of organisations and sees some of the challenges that occur.”

Poor cash flow management, not poor sales, is the single biggest cause of failure for small businesses which by definition turn over less that $2 million annually. Cash flow simply refers to profit versus expenditure. To protect and improve cash flow, SMEs need to get tough and tighten commercial contracts with customers and suppliers. Along with improving cash flow, being relevant and continually investing in innovation are critical to be successful in the marketplace. “It doesn’t matter what business you’re in, if you can’t stand out from the crowd and be relevant to your customers and your consumers, you are not going to have a chance and so that is incredibly important in terms of building a sustainable position for your business or brand.”

The importance of investing in intelligence and innovation cannot be underestimated. Embracing the advances of the digital age and maintaining a social media platform are key elements for success in today’s business world. This is particularly true for micro-businesses and sole traders who lack the budget necessary to advertise via traditional mediums like radio and television. Implementing an online marketing strategy incorporating social media sites such as Facebook, Twitter and Instagram can help SMEs connect with target markets and gain a better understanding of customer needs. “I think it’s fair to say that this is becoming even more important,” comments Mr Browne. “It is a channel where the younger generation and the younger consumer are spending a lot of time and gaining a lot of knowledge about businesses and brands. It is an avenue where you can capture the attention of the target market you are focusing on.” While online marketing may be where the current focus is at, flooding inboxes with spam emails is not the right idea. “If you can’t personalise your approach to your consumers and your customers you are going to struggle to really get their attention and be seen as responding to their needs.”

For small to medium business owners to achieve their goals, collaborating with other like-minded people in the industry and beyond is an absolute must. “I think that if you want to be successful in business you have to have the right people around you,” says Mr Browne. “You have to have the right positioning for what you want to achieve and the right ambitions and I think if you’ve got all of those aligned you’ve got a better chance of success.”

Rotary District 9675 governed by Mr Browne recently hosted SHIFT2014, a one-day powerhouse event designed to inspire, educate and motivate. “Every one of those points that I mentioned, whether it be innovation, embracing the digital age, the rise of marketing to the individual, they are all about shifting people’s mindsets because the economy, the way customers operate and the way consumers shop is moving in a way that you have to be on that train.”

Featuring brilliant thinkers, creators, inspirers and doers from across the business spectrum, SHIFT2014 was about redefining the way organisations and communities operate. Melissa Doyle who is a previous co-host from Channel Seven’s Sunrise team guided attendees through the action packed day of inspirational talks finishing off with a cocktail networking event. SHIFT2014 challenged attendees to take a fresh approach to business, to be innovative and think toward the future. Rotary District 9675 hosted SHIFT2014 to support businesses and community organisations to meet the commercial challenges of hard economic times and aggressive digital competition. “At the end of the day, every organisation goes through change and for organisations to be sustainable for the future, they actually have to shift their mindset and shift their practices so that they can engage new members and community initiatives. We in this world continually move towards new ideas and new approaches and organisations like Rotary have to do the same.”

Australia’s SME sector will be one to watch in the future. Mr Browne predicts that small to medium business owners will become far more professional and proficient in what they do which will ultimately create a stronger economy. He also emphasises the need for SMEs to take bold strides forward even when times get tough, as he did last July. “I think that it’s incredibly important that SMEs actually try and take control of their own destiny rather than waiting for others including the government to tend to their needs because if we don’t take control of our own destiny no one else will.”

Smart ways for SMEs to not just survive, but thrive include paying attention to cash flow and being relevant to customers yet different from the competition. The future is about embracing the digital age but marketing to the individual. Small to medium business owners can really benefit by treating the government like a customer and collaborating with others to share experiences and knowledge. “The last point I made was don’t wait. Don’t wait for recovery,” says Mr Browne who urges SMEs to be their own “white knights” in unstable economic times. “You need to take a leadership role within your own environment and turn it into a proactive approach that’s going to be able to grow your business.”

Making Sense of Management

Management is the art, or science, of getting things done through people. Sounds fairly straightforward – except for the fact that people are not robots waiting to do our bidding. People have their own minds, motivations, and goals. So how do managers keep operations – and the people behind them – running as planned?

December 19, 2018, 5:33 PM AEDT