A new study conducted by Vista Australia, a partner to Australian small businesses, startups, and entrepreneurs, suggests that Australians are risk-takers when it comes to small business ownership, particularly in the initial stages of business setup.
The Vista 2023 SMB Report, released today, delves into the Australian approach towards starting a business, their performance over the past year, and their outlook towards critical aspects such as recruitment, upskilling, and investment priorities for 2023.
- Owners fund most SMBs, with 82 per cent being self-funded. At the outset of their operations, 60 per cent of SMBs have no prior experience or skills in business management or ownership, and only 9 per cent are experienced, entrepreneurs.
- However, despite the market’s uncertain conditions, SMBs are still willing to invest in keeping up with the competition.
- Specifically, 40 per cent of SMBs invest in upskilling and 28 per cent in marketing.
Australian SMBs and their willingness to take risks
Despite the challenges faced by businesses in recent times, such as inflation, cost of living pressures, record-low unemployment, and supply chain disruptions, SMBs are taking risks to gain a competitive advantage. Nevertheless, the outlook for the year ahead is positive, with almost half of Australian SMB owners (48 per cent) feeling optimistic about 2023, according to the Vista 2023 SMB Report released today.
The report also highlights a notable difference between metropolitan and regional businesses in terms of outlook and optimism, with 47 per cent of rural businesses feeling positive about 2023 compared to only 43 per cent of SMBs in metro areas.
According to recent research, the majority of small and medium-sized businesses (SMBs) in Australia have yet to gain any prior business management, ownership experience, or skills when starting their operation. Specifically, 60 per cent of SMBs reported “winging it” at the outset. Surprisingly, only 9 per cent of SMB owners were seasoned entrepreneurs before starting their own gig.
Investment priorities and business prospects
Interestingly, for 41 per cent of SMBs, the business began as a passion project that later turned into a full-fledged commercial enterprise. For another 32 per cent of SMBs, the business idea originated from their previous job.
The study also found that 82 per cent of SMBs were self-funded, with only 7 per cent taking out a loan and 9 per cent borrowing from family or “the bank of mum and dad.” Upon further analysis, the researchers discovered that female SMB owners were bigger risk-takers than their male counterparts. Only 34 per cent of female SMB owners had previous business management, ownership experience, or skills, while 50 per cent of male SMB owners possessed such experience.
As we enter the new year, small and medium-sized businesses (SMBs) are feeling a sense of unease, with the top concerns being inflation (48 per cent) and the possibility of a recession (29 per cent) in 2023. Despite this, SMB owners are still willing to invest in order to stay ahead, with only 20 per cent admitting to feeling hesitant and 22 per cent feeling nervous about the year ahead.
The national focus for SMBs this year is on growth (58 per cent) and recovering from the challenges of 2022 (43 per cent), while one in five (21 per cent) see innovation as the key opportunity for the year ahead. Upskilling is also a major area of investment for SMBs in 2023, with 40 per cent confirming that they plan to invest in this area, with female-owned businesses leading the way at 44 per cent compared to 32 per cent for male-owned businesses.
A significant 26 per cent of SMB owners are looking to learn new technical and digital skills, such as augmented and virtual reality, automation, data, and IT, in the next 12 months, while 20 per cent are focused on improving their leadership skills.
Marketing is viewed as the biggest opportunity for SMBs in 2023, with over a quarter (28 per cent) of SMBs seeing it as a key area of investment. Of those investing in marketing, 30 per cent plan to spend most of their marketing budget on social media, while 13 per cent plan to invest in their website. SMBs are also focusing on networking opportunities (24 per cent) and investing in products and resources (20 per cent), demonstrating that despite initial hesitation, there is still a strong focus on investment in the new year.
Bridging the divide
In regional areas, 38 per cent of SMB owners are planning to learn a new skill in the next year, but their main priority is to upskill in their existing capabilities (55 per cent). To sustain and even grow their businesses, regional and rural-based SMBs are looking to reach new customers by investing in social media advertising (30 per cent), which enables them to access a broader audience.
Despite facing numerous challenges in recent years, such as natural disasters, an uncertain economy, and rising inflation, SMBs remain resolute in the year ahead.
Many are willing to take risks to succeed in start-up mode, and they are not hesitant to invest in 2023. It’s encouraging to see that so many SMB owners are continuing to look towards the future, choosing to upskill and invest, even in uncertain times,” says Marcus Marchant, CEO of Vista Australia.
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