‘Innovation active’ SMEs outperforming
Littlescribe's Jenny Atkinson and Westpac's Ganesh Chandrasekkar reflect on 2018 and the outlook for small business.
The festive season months are a particularly busy time for small business owner Jenny Atkinson.
The founder of Sydney-based Littlescribe, which transforms children’s books into digital books, Ms Atkinson is not only wrapping up the year and carrying out the usual tasks, but also preparing for the start of the next school term.
And she’s not alone: a new Westpac Small Business Report, done in collaboration with Deloitte, found half of small businesses see their sales volumes increase over this period, but more than 50 per cent also struggle, compromising sleep, exercise, relaxing and spending time with family.
Yet for Atkinson, the chaotic period has done little to dampen her optimism about the outlook.
“We’re really optimistic. We’ve got in nine months, three or four new product lines with licenses coming out,” she tells Westpac Wire.
“So it’s good, we’re really excited about the depth of connection and we’re really excited about how that’s translating not just right now for Christmas but for next year as well.
“You take a breath, but it’s a pretty quick one because you’ve got to keep moving and that’s the world we’re in.”
Ganesh Chandrasekkar, Westpac’s general manager of SME banking, said despite some headwinds, such as uncertainty around the federal election, tighter access to credit and softening housing market, the outlook remained positive and conditions in 2019 would likely be similar to this year. He pointed to employment growth remaining strong, above-average investment in infrastructure and the lower Australian dollar helping exporters’ competitiveness.
According to the small business report, SMEs have this year grown revenue “modestly”, primarily driven by expanding domestic customer bases and 62 per cent expect income to increase in the next 12 months. Performance, however, varies from businesses doing “fairly well” in the past 12 months to those “only just scraping by”.
A key challenge was found to be red tape, small businesses spending 12 hours each week completing paperwork to comply with government regulation and also eight hours chasing invoices, the report said. Also, 57 per cent of small businesses said their costs increased in the last 12 months and 80 per cent said recent changes to penalty rates affect their business.
In contrast, the growth of digital tools and new technology provided opportunities for growth.
“‘Innovation active’ businesses are more likely to be growing sales, profitability and productivity than their non ‘innovation active’ counterparts (and often competitors),” the report said.
Mr Chandrasekkar said given the pace of technological change, this was critical for all businesses regardless of size, citing Westpac’s new “Biz Invoice” payment solution that allows businesses to create and send secure and customised invoices direct from Westpac Live online banking. The move coincides with the federal government’s roll out of eInvoicing next year, standardising electronic invoices to help reduce admin costs and boost productivity.
“When I speak to our customers, the businesses that are doing well are those that are innovating, irrespective of sector,” he said.
