2020 has brought defining moments and unexpected shifts in society.
The coronavirus outbreak, in particular, has negatively impacted economies around the world – and Australia is no exception. So, as we enter the next phase, we focus our attention on how to move forward.
For startups and growing businesses, COVID-19 has had varying impacts. It’s sometimes seen as a disruptor, while viewed as an opportunity for others.
This study – published in partnership with GrowthOps — takes a look at the impact the year has brought on Australia’s startups.
We’ve leveraged over 200 business owners and budding entrepreneurs to discover the factors behind their major wins and losses for 2020. You’ll also learn about emerging trends and how tethering to technology can help with brand building amidst challenging landscapes.
COVID-19’s Impact on the Australian Business Ecosystem
Despite the Australian economic downturn, things are not all doom and gloom. Almost 40% of Australian business owners expressed confidence in the next 2-3 years, anticipating steady or rapid growth.
This is an excellent sign for the future of Australia. Further, over 60% of Aussie businesses have a positive outlook on their business’ current state.
Business sentiment is a vital predictor of economic health. Though the effects of the pandemic continue, Australians are confident that there is light at the end of the tunnel.
The Shared Ingredients For Success Among Aussie Startups
In a world turned upside down by COVID-19, many Aussie businesses are still thriving. They’ve relied on their core strengths while adapting to the new ecosystem.
Here is a selection of coronavirus business insights shared by thriving Australian businesses:
1. COVID or Not, Firms’ Unique Selling Proposition (USP) Remains Vital
If you want a shot at surviving, especially in a competitive industry, you need to determine what sets you apart from the other available options. Clever marketing or exciting technology alone won’t guarantee that your target customers will be wowed by what your offering — you have to offer real value and/or new experience
– Survey Respondent
These days, competition is fierce, no matter what niche you’re in. With online shopping, customers are overwhelmed with the choices in front of them. People want to quickly understand what distinguishes one product or brand from another.
We found that brand positioning and product offering remains a key indicator of success. Now, of course, the stakes are higher. With small margins for error, these firms have done an excellent job marketing their unique selling proposition.
In doing so, they’ve grown brand loyalty and retained customers. They’ve also taken advantage of word-of-mouth advertising. This has passively and effectively extended their brand image across online and offline channels.
2. Staff That Goes Above and Beyond
With my previous experience and the support of great staff, [our business] does very well.
– Survey Respondent
The customer journey is complex. It doesn’t matter whether you operate a brick and mortar or an eCommerce store. Your staff has a massive impact on how your customers experience your products and brand.
During the pandemic, staff members have more than just endured. They’ve shown just how creative and vital they can be towards all aspects of business operations.
Whether it be physically or digitally, they demonstrated flexibility and leadership. They have also negotiated complex issues and consumer requests far outside traditional expectations. This is particularly true in areas of product safety and public health.
Further, staff members have helped firms transform offline into online delivery. They’ve often created the new digital channels themselves. Likewise, they’ve led internal transformations to promote efficiency within the company itself.
Businesses should rethink the structure of their organisations to reward these key players. Above all, they should be willing to break traditional hierarchies. Now’s the time to match the right talent to the challenges in front of them.
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3. Capturing The Demand For Digital Delivery
[Our digital channels have created new] Regular customers [that] provide us word of mouth advertising [sustainable revenue]
– Survey Respondent
It doesn’t matter whether it’s in the middle of a pandemic or an economic boom. Product demand is the lifeblood all businesses need pumping through them.
Despite Australia’s economic downturn, online shopping continues to make strides. There are now entirely new sets of online customers who have permanently shifted to shopping from home.
Digital-first or quick adopters of eCommerce delivery firms have gained the most ground. But even companies that cannot 100% deliver digital have also benefited.
The floodgates are open. Pandemic or not, this is what people want. Where possible, firms must embrace contactless and convenient channels for consumers.
4. The Financial Acumen to Navigate Unpredictable Times
We experience stability and success [thanks to] good cash flow, reliable employees and helpful accountants and advisors.
– Survey Respondent
All SMEs have to be financially resourceful. They have limited resources and often are extraordinarily dependent on positive cash flow.
Businesses have been advised to have three to six months of cash assets available. This, of course, represents the ideal and not the norm. As COVID-19 continues, even companies with extensive savings are feeling squeezed.
SMEs have had to be more than resourceful over the last few months. They’ve had to find ways to maintain revenue. SMEs also flexibly manage it so they can survive should economic conditions deteriorate.
The quote above from our survey participant is the most illustrative. Having the right financial resources and skills doesn’t come through one individual (such as the proprietor or CFO). It takes a holistic team effort.
5. Generating Sales Despite/Thanks to COVID-19
Great demand from the clients [created by] because of the coronavirus [has been vital to our growth]
– Survey Respondent
Not everyone who benefited from COVID-19 is a surgical mask or hand sanitiser manufacturer. Many businesses pivoted quickly and maintained sales even as the world locked down.
Businesses that leverage technology to stay connected have done well. Technological resources have proven to be the most important factor for success during the pandemic.
Firms, now more than ever, need to prioritise revenue opportunities. Recovering revenue is especially essential for those companies that lost business during Q2 2020.
Successful strategies include:
- Developing targeted campaigns to regain lost customers
- Building new experiences focused on health and safety, launching promotions
- Allocating spending on growth drivers
- Retooling the sales force to support remote teams
- Embracing automation
Businesses don’t need to do all these things at once. Instead, they should create a strategic plan and find the best options for their growth.
Common Factors Contributing Towards Aussie Business Failure
Many businesses have struggled and failed for many reasons. Even relatively healthy companies have had to shut their doors.
But COVID-19 has brought new challenges for businesses across the nation — with a majority of SMEs still reeling from its impact.
COVID-19 business failures have been a mirror image of the features of successful firms. Some of the largest difficulties have arisen in the following areas:
- The overall economic health of Australia
- Inability to manage tasks efficiently
- Lack of dedication to business
- High competition
Exacerbating these challenges, the ecosystem is likely to stay this way for a while. Many Australians— particularly those living in heavily affected areas in the Victoria region— are waiting for more than just lifting restrictions on social distancing. They want to see how the pandemic evolves before engaging in out-of-home activities and more generalised spending.
Technology’s Positive Impact on Business Success
Technology will be a defining feature of the post-pandemic Australian business landscape. Online marketing and eCommerce will continue to be vital components for business growth. But the role of technology will also grow in new ways.
Below are some of the insights shared by survey participants on the importance of technology for their businesses.
1. Technology is Essential for New Businesses
20% of participants reported technology as the most important factor for the initial business stage.
That’s an important number to pay attention to. Interestingly, human resources were only at 21%. And financial resources had only a slight edge at 27%.
We also found that nearly 70% of participants feel that technology is crucial to business success.
Technology ranking as such an important factor is a markedly new trend. One couldn’t rule out its importance in the past. But the pandemic has emphasised how truly vital it has become.
2. How Businesses Utilize Technology is Another Important Success Determinant
Looking at survey participants who ranked technology as the most important factor, we found how it is used is equally important.
Certain areas have changed little. Individuals still use tech to help the business run smoothly. But, businesses are increasingly adopting tech in new ways:
Above all, firms rank technology as crucial for the changing environment. This makes sense. Australia has quickly shifted to a digital, remote, and contactless business approach. Now, it is vital to have the right technologies in place to continue this evolution.
3. Technical restraints prevent businesses from reaching goals
Having the right tech solutions in place has been integral for firms navigating the pandemic’s challenges. Nonetheless, technical restraints have proven a definite hindrance to 38% of firms surveyed.
Fortunately, many of the issues can be remedied through:
- Finding workarounds for problems
- Installing different apps
- Hiring more resources
- Filing complaints
This does little to shed light on productivity loss that firms suffer while attempting to overcome these hurdles.
Even in firms that have managed a band-aid fix here, they may have larger issues lurking around the corner.
4. Businesses are investing more in tech to keep pace ecosystem changes
Newer businesses, both those less than one year old (56%) and those between 1-3 (49%) years, embrace investing in technology.
This corroborates ideas that newer businesses are more agile and willing to adapt. They are more prepared for the digital transformation currently scaling across all sectors of the economy.
More mature firms are likewise less likely to invest their budgets in new technology. Whether this is a sign of “it isn’t broken then don’t fix” or general intransigence remains unclear. Still, it highlights potential growth areas for mature firms. If they are willing to incorporate innovations into their business practices, then they can drive a new era of success.
5. Factors that contributing to businesses rethinking their tech budget:
We found that COVID-19 influenced Australian SME motivation to alter their tech budget.
COVID-19-related financial hardship commonly causes either reducing or maintaining budget levels.
Nonetheless, many organisations reported optimism. They were indeed increasing their tech budgets to not only boost efficiency but also improve and expand their operations.
The Bottom Line: Harness Technology to Grow and Prosper
COVID-19 has had an unprecedented impact on both the Australian and global economy. There has never been such an immediate, prolonged, and widespread economic shutdown.
While some Australian firms are struggling, this does not paint the complete picture. Many businesses are not only surviving but even thriving.
What our research suggests is that there is a strong correlation between tech adoption and business success. Companies that did navigate digital transformation relatively smoothly have been successful.
There is still time for businesses that have yet to transition to do so. They too can take advantage of these innovations. Here are a few of the areas that all SMEs should begin developing now:
Focus digital efforts to reflect the new ecosystem and consumer expectations
Companies need to reimagine the customer journey as one shaped through digital channels. While the specific emphasis will vary in each sector, retailers need to:
- Create seamless eCommerce platforms
- Enable offline transactions to become completely available online (including sales, returns, and queries)
- Establish digital distributions models
- Train staff to use new technologies
Firms reliant on physical interaction, such as transportation and hospitality, must also
- Prioritize contactless delivery
- Promote rigorous health & safety precautions
- Create action plans if conditions deteriorate
- Transition business as digitally as possible
Accelerate tech adoption
For many firms, tech adoption has meant little more than purchasing computer equipment and putting up a website. In some ways, COVID-changed nothings. Companies need to enhance their IT productivity to lower costs and boost efficiency.
It’s now grown even more important for firms to not only create digital channels and platforms but use them effectively. They need to train or hire staff with the skills to use new technologies. This includes embracing cloud-operations, decommissions legacy infrastructure, and identifying digitally-driven opportunities.
Increase the efficacy of digital operations
To manage the pandemic and its aftermath, firms need to adapt to new operating models. This begins with delivering digital solutions to customers and consumers at scale.
Firms need to integrate business processes and incorporate data-driven solutions. They also need to implement change throughout the operations. Though this may sound daunting, it is manageable.
Businesses across sectors have managed this through developing specialised internal “digital delivery” teams. These cross-functional teams link priorities to corresponding digital practices.
Other firms have taken the opportunity to similarly:
- Reinvent core businesses
- Founded new business entities
- Capture other new opportunities in front of them
The last six months have brought challenges that nobody could have predicted a year ago. Our findings have confirmed, however, that business can succeed by:
- Seizing opportunities that technology creates
- Shifting their operations to digital
- Focusing on core business component
- Driving revenue through new channels
- Marketing their unique selling proposition
Digital transformation is the key to navigating these obstacles and achieving success. In short, business, as usual, is not enough. It’s time for a digitally-powered Business 2.0. Embrace new delivery channels and practices now to set the foundation for your firm’s enduring stability and growth.