The coronavirus pandemic has undeniably hit the majority of small businesses hard and many have had to close their doors. Those that are surviving are doing so through a combination of innovation and imagination.
Innovative thinking: bakery owners who delivered free doughnuts to hospital staff were able to secure COVID-safe approval status for product distribution to the hospital cafe, says Chavan.
Data from the Australian Bureau of Statistics says around 33 per cent of small business have reported a drop-off in revenue of more than 50 per cent over the past year.
Australian small businesses have adapted, modified their business model and even surpassed their previous performance by embracing a proactive strategy.
The small business sector plays a critical role in the Australian economy, making up 98 per cent of all Australian businesses while creating more than 5.6 million jobs and accounting for 57 per cent of Australia’s jobs growth.
Reinvent and reposition
Many businesses have had to reinvent and reposition themselves to survive the pandemic, and some have done this by expanding their target market beyond state borders.
Small business in NSW are now finding themselves selling goods and services across state and international borders – many for the first time via online sales.
These businesses, which typically employ less than 20 workers, include micro home-based operations, the corner mum and pop shops, bakeries, restaurants, gyms, jewellery stores, drycleaners and the like, which are all considered essential services in regular times.
As part of that survival strategy, innovative enterprises have found the need to diversify, digitalise and discover. Many small businesses in NSW never held ambitions to sell beyond a small and defined NSW market but they have adapted to the changes, transformed their business models and are now finding themselves selling goods and services across state and international borders – many for the first time via online sales.
A micro business selling lace-edged wedding handkerchiefs to wedding boutiques in Sydney unexpectedly received an order from Canada after revamping a rudimentary website and optimising an online presence.
A training provider operating in Sydney has enrolled students from New Zealand and Fiji for courses on ‘Marriage Celebrant’ and ‘Finance for Small Business Program’ after pivoting to an online delivery model.
Diversify to survive
Many small businesses have diversified their offerings and changed their business model. Examples include:
- The local gym owner who joined forces with a local retirement village by offering exercise routines to the elderly on site.
- A bakery that delivered free doughnuts and sandwiches to hospital staff for a week which helped it secure COVID-safe approval status for product distribution to the hospital cafe.
- The home-run businesses engaging in a barter system where one worker provided dry cleaning services in exchange for help with tuition for online schoolwork from another home business operator.
- The many restaurants that have reduced their menu offerings and are now catering for delivery-safe foods like frozen pizzas by partnering with delivery service providers.
- A real estate agent using augmented reality and virtual reality technology for showcasing properties online.
Digitally transform
Most Australian small businesses had already embraced digitisation before the pandemic hit by using social media platforms and electronic databases. This has helped them advance further and engage in digitalisation – the process by which digitisation is leveraged to improve business processes – by using their online presence, diversifying product offerings, rebranding, and engaging with new interstate and overseas customers in order to increase their market share.
Adapt or die: Chavan, pictured, says small businesses that embrace new technologies, expand their customer base and broaden their online footprint are most likely to survive these extraordinary economic times.
The pandemic has brought about a shift in the array of goods purchased online. Australians now don’t just shop online for clothes, computers and electronics, they are now purchasing groceries, alcohol and a vast array of household equipment.
Australia Post says online shopping has increased by 80 per cent compared to last year. This growth is expected to continue as shopping habits have now permanently changed.
Australians are forecast to spend $35.2 billion in online transactions by 2021 compared to $28.6 billion in 2019. Eight out of 10 Australians shop online and by 2021 the ecommerce market infiltration rate is tipped to reach 85 per cent, and the number of people buying online will total 22 million.
Discover new practices
Small businesses need to shift their focus to survival by discovering ways to reinvent, cut costs and keep the cash flowing.
The Australian Bureau of Statistics found that in order to remain operational during the pandemic, 60 per cent of all Australian businesses sought external guidance, 65 per cent adopted new hygiene procedures and practices, while 57 per cent made changes to meet physical distancing requirements.
Many small businesses now have broadened their revenue base by reaching interstate and international customers and expanding their online presence through platforms Facebook Marketplace, Etsy and Amazon.
This has been driven by the sector’s shift away from routine activities to redesigning products, embracing ecommerce, investing in online sales, reinventing and rebranding products, and repositioning services to deliver value to customers.
To maintain this level of revival and recovery, small businesses need to take advantage of the assistance provided by the Australian government and upskill by signing up for the free courses for small businesses offered by TAFE.
They can further safeguard their future by becoming digitally savvy and adopting the latest accounting and logistics systems to ensure their survival in these challenging times which are now the new normal.
Dr Meena Chavan is a Senior Lecturer, Program Director Master of International Business from the Department of Management at Macquarie Business School
