Change is coming to South Australia’s economic engine room

This was first published in The Adelaide Advertiser on 27 June.

South Australia’s economic engine room is headed for a major upheaval that will reshape the SME landscape as we know it.

The widespread consumer, industry and government response to the Covid-19 pandemic is causing a seismic shift in the fundamentals of SA’s business sector.

Faced with the most sudden external shock in living memory, the response from small to medium-sized business owners and operators has been inspirational.

Given the success of the State’s health response, we have begun the march to economic recovery earlier than initially imagined.

From the Government to business and banks to our working population and the greater community, there has been a genuine ‘all hands-on deck’ approach and that’s paid dividends

However it’s likely to be a long, winding road with change inevitable along the way.

The Covid-19 response and recovery has dominated boardroom agendas. While some companies are understandably in total survival mode, others are positioning for future growth and eyeing opportunity.

The March quarter Business SA William Buck survey of business expectations found 36% of SMEs were doubtful they could last another three months of restrictions. On a positive note, one in four had introduced a new product or service in response.

The nation’s eyes are now on September when the current JobKeeper arrangements are scheduled to end and if any type of extension is announced.

Regardless, all signs point to a period of rationalisation across the SME sector.

The full extent of this rationalisation may not be known for months, yet hospitality, tourism, construction, not-for-profit, retail and professional services are among the sectors that appear most susceptible.

Businesses with comparative advantages in size, balance sheet, management and operational capability hold the best cards.

This is a time when we’ll see strong businesses get stronger while the weak and vulnerable will struggle to survive.

Opportunistic situations arise and the strong take action through acquisitions or other measures. Market share is redistributed to the Ms of SMEs at the expense of the more vulnerable micro and small businesses.

While the speed of impact and response to Covid-19 has been breathtaking, it’s important to remember that we were already in the midst of a digital-inspired business evolution.

The pandemic has brought even greater focus to flexible working, e-commerce, financial systems, customer interface and supply chain dependence. By doing so, it has dramatically quickened the pace of the evolution.

The SME sector that emerges from this period will be highly agile, innovative, customer connected, digitally focused and fiercely determined and resilient.

That is a positive for the future economic prosperity of our state.

Change is coming to South Australia’s economic engine room

Jamie Mckeough

Jamie is the Managing Director in South Australia and member of the William Buck Board of Directors. Jamie provides business and financial management, tax and accounting advice to clients across many different industries. His key strengths are in problem solving and understanding business models and the key drivers of business.

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