Saving Australian business

Small and medium-sized businesses (SMEs) are at the heart of our economies, employing around 70% of labour markets and keeping profits within local communities. They are also suffering the most with COVID-19. Small manufacturers have been left behind by successive governments in favour of big businesses in the resources sector, and this may well be the final straw.

Our research shows that successful companies are the product of resourceful entrepreneurs and favourable business conditions – their success depends on the local business environment. We’ve come up with three things that business owners can do, and twice as many that governments can do to boost firm performance and support recovery.

What you can do: Knowledge, Network, Mindset

A lot depends on what you know, who you know, and who you are.

The more you know, the more places your business will go. Playing it by ear and blundering your way through means making costly mistakes that are easily avoided. Business schools, polytechnics, and start-up hubs all offer targeted, practical training to help you run a business. Go to a webinar, enrol in a course, share your experiences and learn from other entrepreneurs.

But competence alone won’t get you there. Who you know can make all the difference, and we’re not talking about friends and family. Improving the quality and breadth of your business network will give you privileged access to emerging opportunities and valuable resources. Pursue every chance you get to meet key people in your field and work at making a strong impression. Join the conversation in engineering, supply chain management, and manufacturing excellence. Time invested in a council or association opens opportunities for small business.

One last thing all business owners know but often don’t give much credit: running a company is a psychologically challenging endeavour. To succeed, they must be hopeful and optimistic, to believe in their own potential and persevere when things go wrong. Now more than ever, they need to cultivate the kind of mental fortitude that will help see them and their business out the other end of the pandemic. As manufacturing is technical, business owners often downplay the importance of the psychological. This isn’t a call for motivational self-help, but recognition that a “can do” mindset will prevail.

But this is not enough. Here’s where governments come in.

What governments can do

Even the most resourceful business owners can only just stay afloat when the business environment stifles their efforts. So what makes a favourable manufacturing business environment?

• Access to capital. It takes money to make money. Guarantee schemes, support to the flow of credit, relief packages, innovation grants, rebates, manufacturing stimulus packages are examples of initiatives that governments must offer small businesses on a regular basis.
• Policy relief. Policymakers can support or hinder manufacturing in Australia over importing from overseas: taxes, regulations, permits, licenses, incentives … you name it. Regulatory hurdles hurt small businesses more than large organisations and often put manufacturers at a disadvantage. Policy can level the field by commanding the same requirements from offshore that local businesses are subject to with regards to social responsibility, employee safety, and green manufacturing.
• Access to mentors. Learn from other people’s mistakes. Mentors have the practical knowledge about what works and how to get it. Governments must encourage start-up hubs and chambers of commerce that help new business owners make important connections.
• Access to innovation. Universities are at the cutting edge of development, and Australian universities continue to rise in international rankings. Collaborating with businesses to convert this knowledge into products is not an easy task. Government must bridge these two worlds, bringing research expertise to industry problems that stimulate innovative solutions. Workshops, awards, grants, professional conferences, networking events … they all count and governments are in a better position to co-ordinate and organise such events.
• Access to talent. You need qualified employees, adapted to the pace of work at small businesses. Now is the time to upskill, and governments must incentivise programs to help attract and maintain a highly-skilled talent pool. Retraining and reskilling workers in the age of automation is fundamental to a strong manufacturing sector in a time where Industry 4.0, the Internet of Things, and blockchain are opening opportunities in Lean manufacturing, mass customisation, and supply chain management.
• Access to professional services. Tax, legal, real estate, insurance, accounting … you can’t do it all on your own. Business owners must be confident to outsource these tasks to trusted local service providers on favourable terms. Intellectual property is a fundamental piece where business owners often suffer in silence while their proprietary knowledge is ripped off by foreign companies. Having specialised support with ample knowledge on how things work can save time, money, and produces better results.
• Local attitudes. How people see small businesses actually affects their performance. Does your community support local manufacturers, or stick to the big brands? Governments must work to cultivate positive cultural attitudes towards local businesses.

These factors will determine whether or not business owners can leverage their own resources to drive firm performance and ride out the recession.

The pandemic has reignited discussions about the risks of offshore supply chains and the opportunities to boost onshore manufacturing. Governments can turn around the recession by deploying strategic resources to address local challenges and support manufacturing SMEs.

Flavio Romero Macau is a Senior Lecturer in Supply Chain Management and Global Logistics at Edith Cowan University. Andrei Alexander Lux is a Lecturer in Leadership and Organisational Behaviour at Edith Cowan University.

www.ecu.edu.au