SMEs represent some of the most inventive companies within Australia, with the size to move quickly and seize business opportunities that larger companies cannot match.
Many people are continuing to start their own businesses as well, at least according to the Australian Bureau of Statistics. The most recent figures on business entry revealed there are more than 2 million actively trading companies in Australia with a business entry rate of 13.7 per cent in the 2013-14 financial year.
While these figures point to strong growth, there are persistent challenges that SMEs are facing in Australia. Here’s a breakdown of three of the biggest:
1) Going digital
While many startups in the tech sector are making their mark through cutting-edge designs, SMEs as a whole are struggling to realise the benefit of these services. The latest Sensis e-business report found that many small companies find it difficult to establish themselves in a digital business environment.
Only 31 per cent of businesses are using social media to reach new customers.
According to the report, only 31 per cent of businesses are using social media to reach new customers, while medium-sized firms are spending three times more than smaller companies on their online presence.
There was some good news for SMEs, though, with 61 per cent of those with a website saying it had improved the effectiveness of their services.
In a small business, the connection between how competent the CEO is and how well the team performs is closely related. Building a sustainable SME requires leaders who have a diverse range of skills, can engage with people at every level and also have a clear vision for their organisation.
For an SME owner, it’s important to be realistic when assessing their skills and finding new ways to grow their abilities. Seeking the advice and support of other leaders who are facing the same challenges can also add further clarity to your own leadership style and vision.
3) Cash flow
Cash flow is a permanent issue for small businesses and can create significant issues for Australian businesses whose invoices aren’t settled on time.
The good news for SMEs is that trade payment times are dropping, with research from Dun & Bradstreet finding that payment times in Australia have dropped to an average of 50.4 days in the first quarter of this year. While this is good news, many smaller businesses will still want to achieve a lower rate than this to ensure they are able to continue meeting ongoing expenses.
These three issues are just some of the biggest issues for Australian SMEs, with every industry affected by unique operating conditions and restraints. However, those organisations that can adapt and respond to these challenges will also be those that are best positioned to continue growing into the future.