How mid-size businesses can adopt a growth mindset in uncertain times

Uncertainty brings challenges – but for the ambitious, this can also create opportunity for growth writes Kim Clarke, General Manager – Enterprise, MYOB.

At the start of the new financial year, the economic outlook is far from rosy. Interest rates and inflation are on the rise as we enter a new chapter in Australia’s post-pandemic story.

And businesses are feeling it.

Our recent MYOB Business Monitor (June 2022) found that across the small to medium enterprise (SME) cohort, mid-sized businesses with 20-199 employees are feeling less confident about the economy than small businesses (0-19 FTE). However, despite lower economic confidence, 44 per cent of mid-sized businesses believe they’ll see an increase in their business’ revenue in the year ahead – six percentage points higher than the national SME average of 38 per cent.

They plan to secure and sustain that growth by investing in the systems or operational changes that will help them get there. Top business areas likely to see this investment are IT systems and processes, increasing prices and margins on products and/or services, and the amount they pay employees.

In all, despite the uncertainty and current talk of a bear market, ambitious mid-sized businesses are investing in and setting themselves up for growth in this new economic reality.

An ambitious economy

Past experience tells us that sometimes the best business opportunities or ideas come in the face of challenging times.

Just as mid-sized businesses are getting ready to boost their resilience and competitive edge through targeted investments, we are hearing a similar narrative from the new federal government seeking to take considered steps to strengthen the country’s economy.

And what is fuelling this forward-leaning optimism? Well, despite the economic ‘doom and gloom’ that surrounds us, it’s important to remember that Australia’s economy is still within the world’s top 15[1] – we’re faring comparatively better than many other countries. The challenge now is to make sure we do something with this advantage.

So, how can businesses take advantage of these conditions, putting themselves in the best position to scale?

Here are five ways I have seen businesses get on the front foot.

1. Growth mindset 101: Revenue solves everything

Well, not quite. But almost. And anyone who has been in any business of a reasonable scale for long enough feels the visceral truth in this statement. When revenue comes in, everything is just easier.

When leaders overlook growth and focus only on cost, they risk culturally driving their business to be about themselves, rather than focusing on the market and customers. It is also these businesses that won’t sustainably be on ‘the up’ in the long term.

So, to stay on that front foot, always, always, always keep that growth mindset. Customer and revenue should be the first thing that comes into your head each and every morning. For your benefit, your customers and your people.

And it’s with this pressure that I have seen growth diamonds forged.

I spoke to a professional services firm recently. Armed with a healthy balance sheet, they saw they could ‘hunker down, because winter is coming’. Instead, they took the opportunity to scale, embarking on an acquisition program to grow their operations.

No business has ever shrunk their way to success. Know your limitations and what you are willing to risk, but also know your advantages and leverage those strengths to make growth the priority.

2. Focus on the workflows that matter most to deliver productivity

There’s a lot of buzz about productivity. However, it can be seen as the stick for people to work harder, with ‘the man’ trying to squeeze just that little bit more out of each and every hour. This is not productivity – it’s a step towards destroying workplace culture, effectively removing any oxygen for innovation amongst leaders and employees.

Alternatively, businesses that I see building resilience think deeply about the workflows that matter most for their business, and the material productivity measures resulting from each of these workflows. Moving and closely measuring and monitoring a few workflows can totally transform a business and create a sustainable competitive advantage.

For example, the professional services business mentioned above underpinned their acquisition plans by understanding their key workflows. They knew their ability to scale would rely on performing one workflow significantly better than their competitors. They focused on that workflow, projected five years out, and determined the productivity shape they wanted to transform.

3. Invest in modern digital platforms that transform your critical workflows

To transform sustainably, a business must know their workflows that matter most, and leverage their digital systems to drive that productivity step-change in a way that works for them.

The research supporting this approach is abundant and unequivocal. Deloitte Access Economics, for example, determined that businesses using customer relationship management software generate 32 per cent more leads and land 26 per cent more sales[2], and digitally-enabled SMEs are 14 times more likely to develop new products and services[3].

So, know your critical workflows, know their productivity levers, put measurements and ambitious targets in place, and underpin that step-change with future-fit platforms that empower you and your people to work smarter, not harder.

4. Being resilient means being adaptable

It’s important not to get distracted by the latest shiny tech trends that may not serve your business, however new opportunities to improve practices will arise along the way, so be ready to spot the right ones.

Building in a level of adaptability and a change muscle into your culture – as a mindset and a business capability – is the hallmark of a resilient business that is primed for growth.

Do your systems and process (think workflows and platforms) have the scale and scope to adapt to the changes that are likely to come your way in uncertain times? They may need to scale up or down in terms of production at a low marginal cost, or add workflows to extend your business. The key is ensuring you can do this without too many (and at times – unnecessary) systems adding complexity.

Ultimately, ask yourself – can the business adapt its scale and scope economically? And what does this look like in terms of fixed and variable costs? Of course, it depends on the business, but adaptable and resilient businesses will typically minimise their fixed costs and keep their variable in line with their revenue.

5. People matter most

Be strategic about the people you hire and invest in, and the way you develop the talent already in your business.

Ideally, you want to hire people who are change leaders, and who can cope with a system in flux. The amount of change we are seeing today is likely to only increase, so you want a team of people who can be energised and excited by every new opportunity for learning, not exhausted by it.

Although it might feel like the opposite, now’s actually an ideal time to take a big picture view of your business and develop a purposeful plan that gears you up for successful, long-term growth. As you do this, keep in mind existing and new revenue streams, identifying and strengthening your key workflows, the importance of your people, and building or maintaining a healthy growth mindset.

Combined, this will help propel your business forward and set you up for the next chapter as you scale, and ride out any economic waves ahead.

[1] Why Australia Resilient Economy Benchmark Report

[2] Deloitte Access Economics, Salesforce Digital SMEs, 2018

[3] Connected Small Business 2017, Deloitte Access Economics

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