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Analysis: How can SMEs realistically stay competitive?

Adam Zuchetti
Adam Zuchetti
08 November 2018 7 minute readShare
Big and small businessman

The corporate world has demonstrated its ability and willingness to use size to get what it wants. How exactly can smaller businesses compete without the same financial resources?

We saw instances emerge from the banking royal commission of a major bank being allowed to dictate the size of penalties it paid for misconduct and to draft or approve the corresponding announcements issued by regulators.

We have seen large companies offer staff additional rewards to attract and retain talent – Woolworths is reportedly offering its employees superannuation on parental leave; others are offering additional paid parental leave or unlimited annual leave. The public sector often provides flexi-days and nine-day working fortnights.


But the landscape is infinitely different for SMEs. They are handed financial penalties for wrongdoing and ordered to pay them in full or face even tougher sanctions.

For instance, one small manufacturing business was issued infringement notices by the ACCC worth more than $25,000 which it felt “bullied” into paying – despite its insistence that it had done nothing wrong.


And many smaller businesses are struggling to meet the bare minimum obligations to their staff – award rates, penalty rates, casual loading (which is currently in dispute), Superannuation Guarantee, leave entitlements, minimum termination notice periods and so forth.

Every day on the My Business news desk, we receive complaints from business owners about the ever increasing burden of red tape – particularly in terms of workplace regulations – weighing down hard-working business operators.

Scarily, some leaders actually earn less than their employees.

So how could SMEs possibly fork out even more to match the generous extras being given out by larger companies in a bid to retain their existing staff or recruit new ones to support business growth?



In short, they can’t.

That means a more clever approach is needed, using brains over brawn, and agility over size.

There are some interesting things I’ve picked up over the years of how SMEs can, and are, maintaining competitiveness with the big end of town. This is by no means an exhaustive list, but definitely an overview of some of the key takeaways I have seen Aussie businesses put into practice:

Speak up – and to the right people

Governments – regardless of political ideology – are universally criticised as being out of touch and implementing unrealistic compliance burdens on business leaders.

But how many of us have actually written to or otherwise directly contacted our local member, or relevant minister, to voice our concerns, desires and proposals for change?

I did once years ago – as a self-employed contractor speaking out about falling victim to a phoenix operator. Admittedly, the response was nothing short of lacklustre. But if every single business owner who had suffered a similar loss contacted the relevant minister, the value of that collective data would speak volumes about the scale of the problem and, therefore, the need for political action.

Indeed, migration lawyer Alex Kaufman told My Business recently that the government, while lacking in initial consultation before making its surprise decision to abolish 457 visas, is actively adjusting the list of eligible professions for skilled visas based on industry feedback.

“If nothing were to happen in terms of the stakeholder engagement process, then [more restrictions] would probably happen,” he said.

Likewise, the business leaders who spoke out publicly about their perception of bullying at the hands of the ATO sparked a major investigation of the tax office’s processes and procedures.

That investigation has led to policy debate from politicians about exactly how to shake up the ATO’s appeals process to deliver better, fairer outcomes for SMEs and individual taxpayers.

So make your thoughts known, give voice to your ideas for delivering meaningful change for your business, because more voices adds more impetus and urgency for reforms. You can do this by going direct to your local MP and/or the relevant minister, or by actively engaging with your industry body.

Get to market first

The biggest weapon SMEs have over the corporate world is ironically also their biggest liability: their size.

Think of it as a contest between a mouse and an elephant. The elephant can step on the mouse if it chose to do so, without giving a second thought. But, likewise, the mouse can easily outmanoeuvre the elephant.

Clunky bureaucracy is not the sole dominion of the public sector. Big companies are in many ways the masters of red tape.

Like the elephant, they are so big that they can’t see what each of their four legs are doing – and have never even glimpsed their own tail.

Their cost-cutting sprees can and do sever vital working capital from high-growth business units. Their approvals processes for everything from new products to basic public statements are so lengthy that the world has moved on before they reach an agreed position.

Look at the number of times high-profile companies undergo a round of mass redundancies, only to launch a hiring spree months later because they have let go of their key personnel and work quickly piles up.

This is the prime advantage SMEs have in the market. Decisions are generally made in a single meeting. Announcements can be made in an instant on social media. Products can be tested, released and tweaked according to customer feedback before corporates have reached internal agreement on the font to be used on the price sticker.

If it doesn’t make money, outsource it

Resources are generally tight in an SME. That means whatever resources are available are put to the best use possible.

Business leaders often get caught up doing menial chores and laborious tasks. The mindset of “I’ve always done it” or “no one can do it up to my standard” is surprisingly common. But that mindset comes with a financial cost.

The time spent cleaning the office toilets, doing data entry or some other similar task is actually losing the business money – time that would be better spent sending out invoices, taking those extra customer calls, submitting tax documents ahead of the deadline to avoid interest charges.

Time is a valuable asset in a smaller business, and it should be thought of as such. So outsourcing and automating such tasks to free up that time for money-making activities becomes a key priority.

As one business leader recently said at a summit on balancing parenthood with entrepreneurship, “If I have to do something four times… there has to be an app for that”.

People before profits

The biggest lesson of all out of the banking royal commission came down to priorities. Example after example emerged of bankers putting profits at the centre of what they do, rather than meeting the needs of their customers.

And that flowed from the ground level, with individuals engaging in unethical through to potentially illegal behaviour to boost their own commissions and earnings, through to bank processes designed to maximise shareholder returns rather than deliver optimal customer outcomes.

SMEs though, by their very size, are generally much closer to their customers. And it is this humanised approach that really matters to the bottom line. Happy customers will not only continue doing business with you, but will essentially assume marketing your business for you, directing others in their network to also engage with you.

That might involve giving freebies for loyalty, sharing customer achievements and news on your own social channels, to simply saying more than “next please” at the register and taking an interest in their day and their life.

Similarly, happy staff will go above and beyond for their employer: putting in additional effort to win a new contract; going the extra mile to satisfy a demanding customer; recommended skilled peers to come and work for the business; sharing their ideas for business efficiencies or new products that they might otherwise keep to themselves.

There are plenty of non-monetary or lower cost methods of attracting and retaining quality skilled staff - from flexible working arrangements to free lunches, organising on-site yoga/meditation/cooking or other classes, partnering with local gyms and cafes to offer discounted memberships, to implementing an internal newsletter sharing individual achievements and successes across the wider business.

Business suppliers and partners also come into this equation. A business that is a pleasure to deal with, pays its bills on time and is professional and courteous is infinitely more likely to receive customer referrals from its partners.

I’ve had numerous business leaders say that profits are almost the by-product – being good at your particular niche, and being good to the people around you, is the core tenet of being in business. Get that right, and the money tends to follow.

Don’t ever do things alone

Running a business can be quite isolating. And isolation breeds tunnel vision.

One of the best examples of this appeared on Mark Bouris’ TV show The Mentor earlier in the year. In one particular episode, a regional Victorian business had long struggled to deliver financial returns or a positive environment for its family owners.

As the show progressed, it became evident why: the family, and particularly the patriarch at the head of the business, had never fully come to terms with a personal tragedy. They had bottled it up and tried to battle on.

It was when Mr Bouris introduced them to the father and daughter operators of McGuigan Wines, who themselves had faced a similar family tragedy, did the issue come to the fore and get the attention it deserved.

Mentors and peers can add great insights for a business leader, from being able to look at an issue in a different way, to bringing separate life and business lessons to the table. Sometimes, it takes a different perspective, or even a shared perspective, to really drive a shift from languishing to thriving.

Speaking to My Business after the series aired, Mr Bouris said another common problem facing small businesses is a lack of process (something big business is good at), causing its leaders to lose momentum and focus, in turn causing sales to slide and customers to go elsewhere. So be small and embrace the associated benefits, but dont let that stop you thinking big.

Analysis: How can SMEs realistically stay competitive?
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Adam Zuchetti
Adam Zuchetti

Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016. 

The two-time Publish Awards finalist has an extensive journalistic career across business, property and finance, including a four-year stint in the UK. Email Adam at [email protected]

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