Moments that matter: a smile sets the world apart for Australian SMEs
- Customer satisfaction matters most for Australian SMEs, with 34 per cent ranking ‘seeing a customer’s smile’ as the most important business moment
- SMEs are optimistic, with 73 per cent feeling successful in their own business
- Growth and expansion are firmly on the horizon, with 45 per cent intending to expand
- SMEs want to expand, but feel the pressure from stiff competition and the burden of red tape and uncertain economic conditions
Customer satisfaction and retention, positive word of mouth and happy employees are the new barometers of success for Australian SMEs, according to a report released today by NAB.
Part one of NAB’s whitepaper, MTM Whitepaper Chapter 1, explores what matters most for Australian SMEs and how they’re approaching business in 2017. The research reveals Aussie SMEs rank seeing a customer’s smile as the most important business moment, over other moments such as becoming a viable business (no. 2) or winning a big customer (no. 5).
Angela Mentis, Chief Customer Officer of Business and Private Banking at NAB, says the research affirms business owners are driven by customer satisfaction over things such as money, prestige and high turnover.
“Small and medium businesses are the backbone of the Australian economy, their success is central to our nation’s financial wellbeing.
“While sales and profits are important for Australian SMEs, it is clear customers are why thousands of small business owners around the country get up and do what they do. Despite intense workloads and pressures on all fronts, business owners are energised and motivated by their customers to succeed,” said Ms Mentis
When asked to identify the measures of a successful business, one in three (33 per cent) rated high profits as an important measure – yet it was well behind other factors such as good financial management (58 per cent), positive word of mouth (56 per cent), customer retention (52 per cent) and productive staff (49 per cent).
And while SME’s are distinctly agile – with the majority (75 per cent) having changed the nature of their business since they were first established – they still feel they are held back by red tape.
“SME owners are often our most innovative businesspeople – they’re nimble enough to be ahead of the curve, and have the skills to understand how to manage the risks of the new and daring,” said Ms Mentis.
“But it’s not good enough that over two thirds of Australian SMEs still cite dealing with red tape as taking a lot of effort.
“From our conversations with customers across the country, we know businesses desperately want to spend more time on their businesses, and less time on dealing with paperwork. The effort to adhere to compliance comes at a considerable cost to them.
“Just as they put their customers at the heart of everything they do, we’re continuing to call on all levels of government and the business community to do the same for them.
“This is something we’re leading with simpler contracts, quicker access to credit online and we’re one of the first big companies to sign the Australian Supplier Code, providing greater certainty around payment times,” said Ms Mentis.
SMEs are feeling successful – and they’re optimistic about the future
The research reveals Australian SMEs are hugely confident and optimistic about the future of their businesses with 73 per cent of owners saying they feel successful in business. Their optimism appears to be strongly correlated to their broader outlook on life – with 86 per cent of those feeling successful also feeling successful in life in general.
Growth and expansion are firmly on the horizon
Almost half of Australian SMEs (45 per cent) are planning to expand their businesses in the next three years, while one in ten are in a constant state of expansion.
The outlook for revenue and profitability also assumes growth – majority expect revenue (68 per cent) and profitability (65 per cent) to grow over the next three years.
The growth mindset ramps up amongst millennials – more than six in ten (66 per cent) intend to expand their business over the next three years compared with just 40 per cent of other SME owners.
Competition in the sector is fierce and compliance is still holding them back
Yet for many, the success they want is just out of reach. More than half (52 per cent) believe there is so much competition in their sector that it’s hard to stand out, while 54 per cent believe that stiff competition in their sector has put significant pressure on profit margins.
Australian SMEs are also feeling the pressure of red tape and regulation – with 69 per cent of business owners believing that dealing with red tape takes a lot of effort.
SMEs are distinctly agile
SMEs are distinctly agile and in a constant state of change. The majority (75 per cent) of SMEs have changed the nature of their business since they were first established.
SMEs expand and contract according to market conditions – just under half (48 per cent) have undergone between two to four distinct phases of contraction; whilst one in four have gone through at least one phase of contraction when business conditions are tough.
About the Moments That Matter – Understanding Australian SMEs whitepaper
To explore the state of play in the Australian SME sector, NAB commissioned global firm Ipsos to undertake qualitative and quantitative research with Australian SMES to explore what matters in their world, and how they’re approaching business in 2017.