What the 2022 Federal Budget can do for small businesses
By Ryan Williams | 5 min read | What the 2022 Federal Budget can do for small businesses
Many small business owners will be keenly watching the Federal Budget as it unveils on 25 October and anticipating the impact it will have on their companies, writes Ryan Williams, Director of the Australian Centre for Business Growth and Playford Chair in Business Growth, UniSA Business.
Representing 97 per cent of all companies in Australia and around 60 per cent of the nation’s GDP, small businesses and medium enterprises are a critical part of the economy and need support and strong economic policies to flourish in turbulent times. For some, the upcoming budget could be make-or-break.
For small businesses to improve productivity and grow in times of local and global economic uncertainty, the Federal Budget needs to address key issues.
Four small business issues the budget must address
1. Finance
Access to capital will be much more challenging as economic uncertainty persists. Over the next two years, businesses should have access to a broader talent pool and stock pressures will ease as supply constraints lessen. But if they don’t have capital, SMEs will be forced to tread water.
Therefore, helping SMEs access and learn how to leverage funding is of paramount importance. Hopefully, we will see the Federal Budget offer fiscal education as well as direct support for the SME sector, augmented by a robust grant program to help with research and innovation. Ideally these grants will be geared towards helping capitalise a business, such as buying new equipment and machinery, as well as capital to help accelerate growth, like the current Australian Business Growth Fund.
When there’s more finance available, there’s an exponential effect on small and medium business’s ability to grow and this ultimately leads to greater GDP, productivity, skilled capacity and employment outcomes for the country.
2. Education
More budget should be allocated to practical upskilling in leadership and technology as the pace of change in the business and societal landscape continues to accelerate.
In my experience working with small businesses and medium enterprises, there’s frequently a knowledge gap when it comes to building the right team and knowing how to lead a much larger business. Owners, CEOs and Managing Directors of SMEs need more opportunities to learn how to lead their companies through turbulent cycles, and (more importantly) through growth cycles so that gains are baked in rather than transient. Unlike large corporates and multinationals, dedicated leadership programs are practically non-existent within small and medium sized businesses, and the Budget should facilitate external access to these resources as an urgent priority.
Small business owners and leaders need to learn fundamentals such as leadership, organisational design, people management, finance, marketing and product development. Capable SMB leadership maximises productivity in turbulent times because good leaders know what to do, when, why and in what order to drive sustainable growth.
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3. Talent
Sectors reopening after COVID shutdowns are recovering at very different rates. Many workers who were stood down or laid off from hospitality, leisure and tourism have moved on to other industries, pivoting careers and reskilling. Many of these workers are not returning to the work they did before COVID. This creates a tremendous ‘talent debt’ that must urgently be reduced to restore a diverse economic portfolio to maximum potential.
Solving for talent shortages is a complex issue and requires a multi-pronged approach. Some of the resource crunch will ease naturally as interest rates climb and unemployment rises. However, this is not sufficient to close the near-term gap and there needs to be immediate emphasis in this Budget on training and education to build future capacity. Of particular importance is the ability of training providers to develop a talent pool with practical skill that can be productive sooner. Many organisations tell us that even after graduating from vocational training programs, new recruits still take months (and in some cases longer) before they are work ready.
In the shorter term, businesses will have to overcome talent shortages by ‘buying in’ resources. In this context there is a deeper piece of thinking required in reviewing Australia’s immigration policy. This is especially important when considering that certain skillsets are an almost finite resource in practical terms. A critical talent has choice in terms of countries to reside in. If we are slower off the mark in processing visas for highly specialist roles in science and technology compared to other countries, then these individuals will be lost to our talent pool. This in turn creates a long-term deficit in capability for key future industries and sectors.
4. Supply chain
There is still substantial disruption in parts of the global supply chain; for example, lead times for vehicles and semi-conductor chips are significantly longer than in the past.
Bringing manufacturing home is a concept that many immediately jump to, but there are several challenges to consider in this program. Setting up a business that produces a specific widget with a narrow and limited market doesn’t necessarily make economic sense and is often not sustainable. Where the Budget supports a greater sovereign manufacturing capability, policy levers should seek to aggregate some of the work, so that these companies have a sustainable lifespan beyond just fulfilling immediate or niche needs.
Another aspect that would be beneficial to the Australian economy over the long term is allocating funding to encourage the development of intellectual property in manufacturing and supply chains. This would offer exciting new export or licensing opportunities to improve manufacturing outcomes in other jurisdictions, strengthening Australia’s position in a global context.
Crisis or Opportunity?
This is a time full of opportunity. While there will be challenges to overcome in the next few years, smooth seas never made a skilled sailor. Education should be the Budget’s first port of call as a means to empower SME leaders to navigate better and still achieve progress. But ultimately, all four arenas need to be addressed so that Australian SMEs are given a fair go as the next few years unfold.