Australian Small Business Owners Face Three Key Challenges: Survey

Our analysis has given us an insight into the key challenges faced by Small & Medium sized Enterprise
(S.M.E.) in Australia. We have categorized these issues into the following segments:

Key Segments

• COMPETITION
• FINANCIAL MANAGEMENT
• HUMAN RESOURCES
• MARKETING
• SALES
• FUNDING ISSUES
• BUSINESS TRANSITION
• INTERNATIONAL MARKETS

Based on our survey and analysis of over 100 businesses we have found the key challenges faced by
SMEs are distilled into 3 key areas:

• HR Management,
• Marketing and
• Sales

The following list depicts the distribution of businesses nominating each of the key segments as their main challenges. Fully 76 percent of the response is evident in three areas.

Competition                       4%
Financial Management    4%
HR Management            31%
Marketing                        18%
Sales                                27%
Funding                           10%
Business Transition         6%
International Markets       0%

The following section shows the challenges identified by the SMEs during our research under each key segment:

Competition

• Lack of information about competitors
• Pricing Strategy for their products and services
• Lack of unique/differentiating factors
• Unable to respond to new challenges from competitors

Financial Management

• Poor financial management skill
• Poor budgeting skill
• Poor accounts / book keeping skills
• Poor inventory control
• Poor cash flow management skills
• Lack of cost analysis skills
• Unable to measure profit and loss

Human Resources

• Ineffective management team
• Lack of efficiency
• Lack of Business Process for human resources
• Inadequate human resources
• Lack of motivation

Marketing

• Lack of marketing plan
• Lack of marketing analysis
• Lack of marketing strategies
• Lack of web marketing strategies
• Lack of Public Relations program
• Lack of marketing channels

Sales

• No dedicated sales force
• Owner is usually the sales resource as well
• Lack of sales activities
• Lack of Sales Process
• Lack of CRM system to manage sales process
• Lack of Sales Training
• Ineffective use of sales channels
• Lack of effective distribution channels

Funding Issues

• Lack of financial projection skills
• Lack of forecasting skills
• Lack of Business Plan writing skills
• Lack of experience in discussing or negotiating finances
• Lack of presentation skills when comes to funding
• Lack of knowledge in terms of financing

Business Transition

• Critical transition period from previous generation
• Unable to integrate acquired businesses
• Unable to sell non-performing units

International Markets

• Lack of know-how in planning for exporting
• Lack of knowledge in international markets
• Lack of knowledge in targeting opportunities in offshore markets

In terms of Sales and Marketing, it was found that SMEs spend very little time in planning and budgeting for their sales and marketing activities, and often base them on an ad hoc approach.

Other issues communicated by business owners related to:

• Managing the business
• Marketing
• Productivity (employees and business owners)
• Administration support
• Financial budgeting

Other concerns were inventory control, staff satisfaction, waste elimination, unproductive use of time and reducing supply chain costs. In most cases, smaller retailers are operating with a short sighted view, without any real business knowledge, absorbed ‘in their’ daily business and unable to work ‘on their’ business to employ more people to delegate smaller tasks and concentrate on growth strategies.

Financial issues are often related to poor sales and ineffective human resources management.

Funding is becoming a major issue for many corporations, and is likely to become critical in 2010 as banks tighten their lending criteria. Surprisingly, although international markets / exporting was regarded as a key growth area by many corporations, Australian businesses especially SMEs are still largely unprepared (needing quality market research and business intelligence) compared to their counterparts in Europe and North America. Australian SMEs may have been missing a lot of business opportunities overseas due to a lack of ready access to valuable global market information.

End Report