Laying the foundations for stronger Australian small businesses

  • May 4th, 2021 at 10:50 am

The importance of small and medium enterprises (SMEs) to a healthy Australian economy cannot be overstated. SMEs make up 99% of the economy and employ two in every three Australian workers. As they grow, so too does the economy, employment, and access to new and diverse marketplaces.

NAB has long advocated for reforms to unlock growth for SMEs and the bank’s report ‘Supporting Economic Recovery: What we can do for Small Business’  was released to support Australian small and medium businesses recover and grow now the worst of the COVID-19 crisis is behind the Australian economy.

Ana Marinkovic, NAB’s Executive for Small Business believes SMEs across Australia can be held back by unnecessary burdens that prevent them from spending time on things that can help grow their business.

“Easing the burden of regulation, ensuring big businesses pay their smaller suppliers promptly, and helping SMEs adopt more digital tools that can make them more efficient and competitive are just some of the ways we can boost SMEs in this country”.

“NAB believes large businesses and governments can lead the way in creating a more level playing field for Australian SMEs by taking urgent action in the areas that matter most. Through ongoing cooperation and coordination across all parts of the economy, Australian SMEs will make an even more meaningful contribution to our nation’s future prosperity.

Supporting Economic Recovery: What we can do for Small Business; identifies the eight critical areas of reform:

Making it easier to hire new workers 

Small businesses often don’t have the systems and processes required to deal with the regulatory and compliance burden required when employing workers. A small business hiring its first worker can spend up to 18 hours understanding awards and pay rates and complying with taxation, award, OH&S and recordkeeping obligation. Therefore, cutting red tape and providing support could make it easier for small business to hire workers.

Cutting regulation

Small businesses often lack the scale and resources to stay on top of regulatory burdens. The NAB research reports that 7 out of 10 Australian SMEs are dealing with government red tape that detracts from their business. An increased focus on reducing regulation will give SMEs back the time to work on their business rather than in the business.

Making sure small businesses get paid faster 

More than half (53%) of small firms’ trade credit is paid late by large firms, amounting to $115 billion in late payments per year. Moreover, late payments from large businesses effectively deprive small businesses of $7 billion in working capital every year. Measures such as e-invoicing and the support of large firms for the National Payment Reporting Framework are just a few ways of speeding up cash flow to support small business growth.

Harnessing the power of digital tools

Less than 40% of micro and small firms use digital tools to support planning, marketing, or production processes, according to the NAB report. Therefore, SMEs must be equipped with the incentives and support to adopt digital tools. The NAB recommends industry associations, trusted advisors, and supply chain partners act as mentors to help small businesses build confidence and identify opportunities to adopt digital tools.

The SBAA is a proud participant in The Small Business Digital Champions Project, an Australian Government initiative intended to inspire and equip Australian small businesses to thrive in the digital economy. As a ‘Trusted Digital Advisor’ for the next 2 years, SBAA will be offering MSMEs access to free workshops and one on one advice from trusted industry partners about the latest digital and technology initiatives.

Opening procurement opportunities

Small businesses can find it difficult to access government and corporate procurement opportunities. Some simple actions could help expand procurement opportunities, such as increasing the number of government contracts by value given to SMEs from its current 10% procurement target. Also, large businesses could improve their onboarding process to register small suppliers more quickly and at a lower cost. 

Further access to capital 

SMEs need greater access to a more diverse range of finance options, with 1 in 3 new businesses reporting funding as their top challenge, according to the NAB.

NAB is proud to partner with the Federal Government and other major banks to establish the Business Growth Fund, which provides SMEs with access to equity growth capital. Governments are also supporting small business finance through funds such as the Australian Business Securitisation Fund. 

The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) has recommended banking regulator APRA moves from the one-size-fits-all model and allows regulated institutions to apply risk weightings to specific risk factors to improve small business access to capital. Meanwhile, Open Banking will enable small business customers to instruct their banking services provider to share their data with accredited third parties, opening up more financial competition.

Lifting small business management capability

Small business has much lower management capability than large firms, according to the report. To this end, NAB already supports business owners and managers with the critical skills to build their business with up to 300 partial scholarships for business customers for the Australian Owner-Manager Program.

The Australian government could consider offering a Capability Development Voucher Scheme recommends NAB that pays for half of the eligible firms’ training costs or a similar voucher to support more businesses to access the Australian Owner-Manager Program. 

Small businesses should be supported with digital training and capability development and given additional funding to support, networking and events for small business owners and managers.

Improving state business conditions 

There is an opportunity through the National Cabinet to streamline differences across states that result in business red tape and costs such as different road transport requirements, OH&S rules, and licensing.

For further details, please see Supporting Economic Recovery: What we can do for Small Business.

If you would like to have a say about small business policy reform in Australia please see The SBAA International Small Business Summit.

To find out more about becoming a member of SBAA, call us today on 1300 413 915.