A recent Commonwealth Bank (CBA) study conducted in collaboration with YouGov has revealed that 80% of small and medium-sized enterprises (SMEs) are strategically planning investments to fortify their customer propositions and spur growth throughout 2024.
The findings coincided with CBA data indicating a positive trading period for SMEs, with a 5.4% increase in earnings during the second quarter of FY24 compared to the first quarter.
“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,” said Rebecca Warren (pictured above), executive general manager of small business banking at CBA.
“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 found that SMEs are adopting innovative approaches to overcome market challenges, with a focus on marketing strategies, product development, and staff training. Top strategies for driving growth included investing in marketing (45%), staff (34%), revising pricing (31%), investing in new product and/or service development (31%), and diversifying stock and the supply chain (13%).
“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.”
Despite positive prospects for SMEs, challenges persist, with rising costs and rates being the most significant concerns for 60% of businesses. Challenges included rising input costs (41%) and energy costs (35%). Cash-flow management is cited as a challenge for 42% of business owners, while 20% face staffing issues related to retention (15%) and attraction (14%).
Warren noted that many SMEs are proactively addressing challenges by expanding revenue streams through new products or services (31%) and targeting new markets interstate and overseas (27%). Small businesses are also investing in new equipment and technology to enhance efficiency and reduce costs, with a focus on energy-efficient equipment and software applications.
“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 said.
“We are here to support businesses in their efforts, whether it be better managing cash flow cycles or investing to grow for the future.”
The YouGov survey, conducted online between Dec. 21 and Jan. 3, included 529 Australian SME owners and senior decision-makers, comprising 366 small businesses and 163 medium-sized businesses. Additionally, CBA data compared average turnover for SMEs in the first and second quarters of FY24 in 2023-24.
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