A new Commonwealth Bank report highlights the fact that SMEs are innovating and investing to respond to market challenges, with many planning to prioritise marketing or create new products and services, while also focusing on staff training and development,
The research, conducted in partnership with YouGov, is being released alongside CBA data which shows a positive trading period for SMEs leading into the festive season, with earnings increasing 5.4 per cent in the second quarter of FY24, compared to the first quarter of FY24.
“Despite a difficult environment posed by inflation, rising interest rates and workforce challenges, the research shows small business owners are planning to take proactive action to drive growth over the coming months,” Rebecca Warren, Executive General Manager of Small Business Banking at CBA, commented. “Our focus is on backing these businesses and the entrepreneurs that run them. We want to help them drive growth and set them up for success.”
The research shows that the top strategies SMEs plan to use to drive growth are investing in marketing (45 per cent) and staff (34 per cent). Other strategies included revising pricing (31 per cent), investing in new product and/or service development (31 per cent), and diversifying stock and the supply chain (13 per cent).
“An uptick in demand for marketing and communications services suggests businesses are intensifying their customer acquisition and loyalty strategies,” Warren said. “Greater priority is also being given to employee wellbeing and productivity with many focusing on strategies to retain current staffing levels and improve performance with training and development. All this is positive for workers and business owners alike, with flow-on effects across the entire sector through supply chain and aligned sector ecosystems.”
Nevertheless, the research reveals that challenges remain, foremost being the rising costs and interest rates as cited by 60 per cent of SMEs, as well as rising input costs (41 per cent), and energy costs (35 per cent). In addition, 42 per cent also cited challenges with managing cashflow in the next 12 months and 20 per cent said they had staffing issues such as retaining staff (15 per cent) and attracting staff (14 per cent).
“We know many SMEs are innovating and investing to respond to challenges,” Warren said. “A lot of businesses, particularly in hospitality and professional services, are taking proactive steps such as planning to expand with new revenue streams by creating new products or services (31 per cent) or by targeting new markets interstate and overseas (27 per cent) in a bid to win more customers.”
Small businesses are also noted to be investing in new equipment and technology to boost their efficiencies and reduce costs.
“Energy efficient equipment such as electric commercial vehicles, and software including marketing and social media applications are high on the wish list for purchases 2024,” Warren concluded.