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Locked down but not out: SMEs raring for reopening

08:00am October 11 2021

A new survey of SMEs shows two thirds are optimistic about the business environment. (Getty)

It’s been a difficult period for millions of Australians and today’s easing of COVID restrictions in New South Wales marks a significant moment in the nation’s path through the pandemic. 

We have seen an incredible response across Australia to accelerate vaccinations, and this much anticipated milestone for NSW will bring greater freedoms for both households and businesses. 

Other impacted states aren’t far behind, and, in fact, the entire country is doing well in a short space of time, pushing up past 80 per cent of eligible Australians receiving their first dose – which is good news for the economic recovery.

Of course, uncertainty undoubtedly remains for many people and if the past 18 months are anything to go by, there’ll likely be some bumps along the way in coming months. But vaccines are proving highly effective, and the proportion of the population vaccinated will only increase over time as we learn to live with COVID. 

As someone who lives in Sydney, I’m feeling optimistic about what’s ahead – not just for the personal relief that comes with getting out of lockdown, but the bounce back among businesses and the economy that looks set to come through. 

Despite being the longest lockdowns Australia’s experienced, small and medium sized businesses – the backbone of the economy – are holding up relatively well. 

We know pain persists in certain geographical areas and industries, and we’ve continued to support those customers experiencing stress. Overall, sentiment remains resilient to what has been an unimaginable shock. 

Surveying more than 1000 SME business owners and decision makers last month, two thirds were optimistic about the current business environment, and around 70 per cent expect their business and sales to grow in the next 12 months.

When asked about the impact of lockdowns on their business, 26 per cent even answered that they were either better off or much better off, with a further 34 per cent saying things were unchanged.

Digging deeper into the data for what’s driving the resilience, it actually reflects many trends I’ve seen from customers in the past 18 months, in particular greater agility and innovation. 

More than 80 per cent of SMEs surveyed said they’d adapted their business during COVID, with around a quarter starting or expanding online offerings or developing new product/service lines. Close to half have found new customers or markets, with a quarter planning to diversify their product or service offering over the next 12 months and 15 per cent eyeing an expansion into a new state or territory. 

Given the accelerated shift to digital channels during COVID, the most common opportunities to unlock growth over the next 12 months are investing in online and innovation, with one in five planning to expand or commence online offerings, and a notable 10 per cent looking to switch to online only within the next 12 months.

Unsurprisingly, it wasn’t all good news. 

A little more than 60 per cent of SMEs admit the lockdowns have knocked their confidence in their own business, with leaders of medium sized businesses more optimistic about the business environment than their smaller counterparts.

Almost half of SMEs also had to reduce staff or close premises because of COVID restrictions, with lockdown-hit NSW and Victoria most affected. In addition, 80 per cent of SMEs have suffered an increase in the cost of doing business over the last 12 months, and 83 per cent have found it more difficult to source products and services from suppliers due to lockdowns and restrictions. 

Indeed, SMEs resoundingly want the nation to move beyond lockdowns. 

Asked what the most common and biggest challenge they will face over the next 12 months, almost half nominated further lockdowns/travel restrictions, led by those in Victoria and NSW. Allowing customers to return by ending lockdowns was also the main form of support SME leaders want and 73 per cent support the idea of greater freedom of movement for vaccinated residents. 

There are clearly many different views about vaccines and COVID in general. 

However, as someone with a science background, I firmly believe – and as improved health outcomes for the vaccinated are reinforcing – the sooner we all get the jab the better. Developing the vaccines in less than a year has been one of the truly remarkable achievements of our time and we should all be thankful to the scientists and researchers involved. NSW surpassing the 70 per cent fully vaccinated threshold sooner than expected is welcome news.

With vaccine supply constantly improving, every Australian can do their bit to continue to push vaccination rates higher and give us more freedom and flexibility in how we live, work and travel.

While we started 2021 hoping the worst of COVID was behind us, the virus again threw us a curve ball with Delta – and it’s unlikely the last. However, the economic and health outlooks are well supported by the vaccines, and our economics team expects strong GDP growth of 7.4 per cent in 2022. 

Despite the events of recent months, many SME Leaders remain hopeful too, with our survey finding 85 per cent are at least somewhat confident the economy will quickly return to growth once Australia reopens.

I’m firmly in this camp – and it was heartening to see that SME’s leaders whose businesses need to bounce back once we reopen believe it will take a little over a year, on average, for this to happen. That suggests less “scarring” among SMEs and entrepreneurs than was feared when COVID hit. 

To me, these results reinforce my view for some time. Like last year, the economy is primed to bounce back – and more people getting vaccinated is key to ensuring businesses can reopen their doors and play their critical role in the recovery.

And we’ll be here to support business every step of the way. 

Chris de Bruin was chief executive of Consumer & Business Banking at Westpac from February 2021 to July 2023. Chris brought nearly 25 years of experience in the financial services sector globally, spanning retail banking, consumer product portfolios, fintech and digital banking. He spent 13 years at Standard Chartered Bank, in senior roles across Asia and the Middle East; and prior to joining Westpac, was chief executive of Deem Finance in Dubai, one of the largest non-bank financial institutions in the Middle East, following a year in Toronto as president of Canadian fintech Zafin. Previously he was an Associate Principal at McKinsey & Company.

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