The Australian mid-market is a sector with extraordinary potential for the country.
By their nature, these businesses can be more dynamic and highly flexible, able to respond to changing markets while identifying and exploiting new opportunities as they arise. They also have the potential to feed more back into the economy – stimulating job growth, introducing new technologies and reinvesting their profits within Australia.
Australia’s mid-market makes up just 2.3% of all businesses. Yet these ‘bigger businesses’ make a significant impact on the economy. Around a quarter of the nation’s workforce is employed by one of these enterprises.
Despite the enormous possibilities contained within the sector, at present Australia isn’t getting everything it could from the mid-market.
In part, the issue lies within the businesses themselves. As is frequently observed in a country with a lifestyle as enviable as Australia, many owners of the country’s bigger businesses are comfortable enjoying the benefits of their enterprise, without taking on the additional risk and stress associated with a growth agenda. Many too – particularly at the larger end of the scale – are satisfied with the level of success they have achieved and focus more on maintaining the position they have achieved in the market rather than pursuing further expansion.
While a good number are comfortable with a level of growth that will see them dominate their local market or expand throughout the country, only a small proportion of the total number of bigger businesses have ambitions to take on the world.
At the same time, some businesses are likely to be constrained purely by the limits and experience of their owners. With a large proportion of Australian enterprises relying on the direction of an individual owner, they are less likely to enjoy the clear benefits of the broader capabilities of an expert management team and the independent experience of a board.
And a surprisingly large number of businesses are unprepared for the levels of disruption we are likely to see through the introduction of new technologies, nor are they willing to invest in the research and development necessary to help transform their own business in the face of rising pressures and a growing skills crisis.
But the issue overall is less about the attitudes of the business owners themselves and more about the environment in which they operate.
If we are truly serious about developing this country into a leading international competitor, underpinned by the growth and development of productive, dynamic and technologically-enabled businesses, succeeding as part of a flourishing knowledge economy, we need to do everything we can to focus on their needs and foster their development.
And this will mean stimulating greater investment in research and development by providing incentives for the businesses that are willing to forgo higher profits to focus on developing valuable knowledge and infrastructure.
It will also mean taking serious steps to mitigate the crushing shortage of skilled staff, by investing in training – not just at university but in applied skills – which is responsive and appropriate to the needs of industry. It will also require us to take a nuanced approach to immigration, so we can attract in-demand experience from all over the world, and channel those skilled migrants not just to the major centres but into the areas they are needed most.
But ultimately, it will require us – as a nation – to start recognising the vital importance of the mid-market, benchmarking their success and developing the framework of support they need to go from ambitious entrepreneurs to world-leading powerhouses.
If we can focus on Australia’s mid-market not just in terms of the small number of businesses from a broad range of sectors this represents, but instead look at them in terms of the size of their current contribution to the local economy and the potential they embody, we are far more likely to be able to provide them with the resources, support and investment they require to maximize the benefits they can bring for the whole economy.