The Aussie business sector has shown resilience in recent years, surviving lockdowns, natural disasters, a labour shortage, increasing interest rates and inflation. In the 2022 financial year, there was a 7% (or 167,646) increase in actively trading businesses in Australia. However, as the risk of an economic downturn looms, research shows the lengths to which businesses will go to survive, with two thirds willing to expand their sales or suppliers in global markets.
What were the findings of the survey?
The finding was derived from a survey of a panel of 210 owners and senior decision makers of SMEs by Money Transfer Comparison, a comparison website that enables individuals and businesses to source the best money transfer providers and rates. The respondent pool comprised 44% of micro businesses (1-10 employees), 27% of SMBs (11-50), 18% of medium-sized businesses (51-200) and 11% of large businesses (over 200 employees).
1 in 3 SMEs would expand their sales to overseas markets
The survey found that 32% of businesses would expand their sales into overseas markets to help them through tough economic times. This significant interest in expanded customer bases and revenue comes after nine months of unrestricted overseas travel and trade, and despite only 5% of businesses revealing they were already trading internationally.
More Victorian businesses are likely to expand to international markets, with 41% willing to make the move, followed by an equal 33% of ACT and South Australian businesses, an equal 29% of NSW and West Australian businesses, and 24% of Queensland businesses.
Nearly half of the ASX100 generate over 30% of their revenue from overseas, and while the pandemic led many businesses to focus on the Australian market, overseas expansion with the right products and research can offer businesses significant growth opportunities.
In 2021, McKinsey issued a report, warning businesses not to return to ‘business as usual’ after a tough economic year and encouraging businesses to make use of weakened global markets to expand internationally. It provided insights into previous crises that showed how businesses return from a downturn can set the tone for a future decade of success.
2 in 3 SMEs would outsource some form of suppliers internationally
Money Transfer Comparison found that 66% of businesses surveyed would outsource some of their suppliers overseas. A third (33%) would outsource labour internationally and more than a third (35%) would use international parts, to develop their goods. One quarter (24%) would use international software and technology services to support their business.
More micro businesses are willing to stick to Australian suppliers, with 57% unwilling to switch to any overseas suppliers, in contrast with 21 per cent of medium-sized businesses and 11% of small businesses. Small businesses are most likely to outsource labour internationally, chosen by half (51%) of this group, followed by 37% of medium-sized businesses.
Despite their traditionally lower incomes and margins, micro businesses are significantly less likely to change their local suppliers to cheaper overseas labour, with only 16% willing to outsource international employment. Across the States and Territories, ACT businesses are most likely (chosen by 67%) to outsource parts and materials to develop goods for clients.
This was followed by an equal 40% of Queensland and SA businesses, 38% of WA businesses, and an equal 32% of New South Wales and Victorian businesses. Manufactured goods account for over two-thirds of world merchandise trade3 and Australian-made products are integral to significant economic and trading opportunities for the nation.
What do the findings mean for the industry?
While international production can reduce business costs significantly, the manufacturing sector employs roughly 900,000 people and indirectly supports the jobs of another 1.5 million. The Australian Council of Trade Unions reported in 2021 that 400,000 new direct jobs in manufacturing and 265,000 new jobs throughout the manufacturing supply chain could be created if we produced as many manufactured goods as we consume in Australia.
Manufacturing is also the most ‘innovative-intensive’ industry in the economy, with countries high in manufacturing capabilities heading the forefront of innovation leadership.
Alon Rajic, Founder and Managing Director of Money Transfer Comparison says: “Australian small-to-medium enterprises have faced extremely tough challenges in recent times, so it comes as no surprise that many may be looking to recover faster, or survive better, by expanding their customer bases to new markets or switching to overseas suppliers.”
“While there is risk associated with business expansion, especially in uncertain economic times, a well-researched shift to international markets or suppliers can be an effective growth strategy for the right products, with the right funding and support,” Alon concluded.
