Business battlers: when the going gets tough, get going

Written on the 17th of February 2009

• More than half of Australian businesses are diversifying into new markets
• Almost two-fifths (38%) are developing new services/products
• Almost a quarter (23%) are opening new strategic locations

Australian businesses are doing their best to dodge the downturn, according to research released today.

The Grant Thornton International Business Report is an annual international survey of 7,200 privately held businesses which tracks constraints on business growth.

With a third of Australian respondents saying that a fall in customer demand was a major impediment to their ability to expand their business, the research also tracked what firms were doing in response to the changing economic climate. 

While defensive strategies like cost review and cost reduction seem to be priorities for Australian businesses, almost as many local entrepreneurs are exploring new ways to keep their business afloat.

Across Australia, the most common measures businesses had taken to prepare for the downturn were:

• Cost review of the business (56%)
• Cost reduction strategies (53%)
• Diversification into new markets (52%)
• Training the current workforce (51%)
• Development of new services (37%)

Western Australia and Queensland seem to be particularly proactive, with two-thirds (66%) of WA businesses and over half of Queensland (56%) businesses targeting new markets to stay on the front foot.

Nationally, a quarter of Australian businesses reported increasing their advertising spend and a fifth have undertaken a recruitment drive - capitalising on the freed-up labour market.

Tony Markwell, National Head of Privately Held Business at Grant Thornton Australia, commented:

“In the current climate business owners will have to find new ways to overcome a lack of demand for their core services.”

“Each operation is different and the strategies they implement need to be specific to their situation. However, a valuable first step is to review your costs and really investigate where you can reduce them, because as cash flow slows down you are going to need as much padding as possible to stay above water.

“However, you can’t just afford to retreat into a bunker in this current market. Although a shortage in customer orders might derail the growth plans of some Australian businesses, many are already busy developing alternative ways to expand, and scoping out new markets. If there are new services you can develop, or existing services which can be adapted, then you can not only keep your business going, but keep it growing.”