Even as the pandemic imposed major challenges on some Australian businesses, new research shows that confidence has risen over the last 12 months, as business leaders shifted their focus from consumer preferences to digitisation and digital marketing.
Pitcher Partners on Tuesday released the results of their annual Business Radar, which shows that 40 per cent of middle-market businesses felt that the pandemic had a positive impact on their business.
Confidence levels reported in “current strength of your business” rose to 7.61, up from 7.24 for the previous year, while confidence in “future success of your business” increased to 7.68, up from 7.26 the year prior. Industry confidence rose from 7.03 to 7.10, while confidence in the Australian economy jumped from 6.08 to 6.55. Meanwhile, confidence in the global economy fell from 6.00 to 5.80.
Gavin Debono, executive director at Pitcher Partners, said that Australian business confidence has sustained consistent levels over the last 12 months.
“Businesses did not let the pandemic go to waste,” Mr Debono said. “Our research revealed that confidence increased across most areas. Levels grew in current business strength, the future success of the business, industry, and the Australian economy. Confidence levels in the global economy declined slightly.”
The report found that middle-market businesses with low confidence in their current strength, which accounted for 33.9 per cent, are more susceptible to making rash decisions than those with higher confidence, at 15.9 per cent, who are more likely to have formal mid- to long-term strategic plans and take a calculated approach to decision-making.
Pressures felt from the pandemic also saw business priorities shift, as consumer preferences fell out of the top five in favour of digitisation, embracing technology advancement, and looking to bolster digital marketing efforts.
The shift away from consumer preference, according to the report, is likely one born out of necessity, not choice, as business leaders direct all of their attention to weathering the uncertainty brought on by the COVID-19 pandemic.
“Technology advancements and digital marketing remain high on the list for business owners and leaders, seen as both a challenge and an opportunity,” Mr Debono said. “Similarly, navigating and understanding government regulations remained in the top five priorities for business.”
One year on, few businesses have shown concern for the trickle-down effects of global geopolitical and macroeconomic events, and some business leaders have shown an awareness for what’s happening in other industries.
“Arguably, the events of the last year have changed this,” Mr Debono said. “The pandemic has impacted businesses across many sectors. It has also reinforced the importance of understanding what is going on beyond their immediate organisation or industry.”
A key finding of the report was that strategic planning and decision-making are critical factors in the success and long-term growth of middle-market businesses. A quarter of those surveyed said they involve external advisers and advisory boards in strategic planning, and more than 50 per cent reported to have a strategic plan in place.
Businesses that reported higher levels of success during COVID-19, according to he report, had strategic plans and processes in place.
Mr Debono said that thinking ahead and knowing how to plan effectively has been brought front of mind for middle-market business leaders, who are turning their focus to continued recovery and a “new normal”.
“Not surprisingly, the most confident businesses have systematic, ongoing, strategic planning processes, and have engaged in succession planning,” Mr Debono said. “We found that less than half of mid-market businesses are confident in their strategic planning and decision-making.”
The report found that 52.5 per cent of businesses have a formal mid- to long-term strategic plan in place, while 31.7 per cent have a formal, short- to mid-term strategic plan in place, and 15.8 per cent reported making strategic decisions on the fly.
Since the pandemic began, 44.2 per cent of the businesses surveyed reported to have increased their strategic planning frequency, while nearly 30 per cent said they’d engaged expert advice.
Succession planning was identified as a sore point for the majority of business leaders by the report, too, as 58.4 per cent of business said they had yet to undertake succession planning, while 62 per cent said they intend to implement, or continue, succession planning.
It’s a sign of increased focus, according to Mr Debono, who expects the coming months will see succession planning become a pressing issue for more than a third of businesses with more than 200 employees on their payrolls.
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