In 1966, Robert Kennedy said: “Like it or not, we live in interesting times. They are times of danger and uncertainty, but they are also the most creative of any time in the history of mankind. And everyone here will ultimately be judged – will ultimately judge himself – on the effort he has contributed to building a new world society and the extent to which his ideals and goals have shaped that effort.” If Kennedy were alive today, I wonder what words he would use to describe the time we share and the world we live today?
It is a question I recently pondered when we brought together (virtually of course) 25 business leaders, (including CEO’s of several local SME clients and Senior Executives from some of our global Enterprise customers) to network, connect and discuss.
Specifically, the discussion focussed on three areas:
- The most recent budget and the implications (positive and negative) for businesses
- The diversity and range of grant funding being made available by Federal, State, and other bodies
- A broader discussion of domestic and international markets – with a particular emphasis on calendar 2021
As we reflected upon the new world we find ourselves in, our discussion delivered some surprising insights and provided a roadmap for a world beyond COVID that is worthy of a broader review. Read on to learn what you can expect from the coming 12-24 months, discover the outcomes of our discussion, and learn how to leverage them to move your business faster and further.
The budget discussion kicked off with and was guided by some particular statistics and forecasts:
- GDP declined 7% to June (vs. 10% USA, 22% UK) and growing 4% in 2021
- Gross Govt debt rises to 45%. Peaking at 50% in 2021-22
- Unemployment falling to 6% 2021-22
- $1.5bn modern manufacturing initiative (co-funding major projects)
- Planned personal tax cuts brought forward (est. cost $50bn)
- Carry back losses for 2020, 21 & 22 years against profits from 2019
- Instant asset write-offs
- $200 / week towards cost of hiring 16-29 job seekers ($100 for 30-35)
- Increased $$ for apprenticeships and training programs
From these numbers, it was obvious that while digital transformation and reconfiguring physical spaces to meet the new norm were considered sensible investments, subsidies to encourage the hiring of younger unemployed were not as resoundingly accepted. For many, the priority is still about getting “the right people on the bus.”
New opportunities in manufacturing, global markets, along with education opportunities in STEM flowed from the budget, along with a big tick for accelerated depreciation as a source of pump priming investment. But even with these incentives, it was agreed that cash flow remains king and confidence needs to build before businesses will have the certainty required to invest aggressively.
Grants and Government Incentives
Whilst initiatives like EMDG Grants and 1.9 Billion R & D Incentive we highlighted as significant opportunities, there are a range of other sources of funding worth drawing attention to.
- EMDG movers to multi-year grants July 2021 with grant agreements vs the previous claim back justification model. To be eligible, you need:
- Turnover less than $20 M & Export Ready
- SMEs new to export able to access grants up to $80,000 over two years
- Exporters who plan to expand their presence or enter new markets access grant to $240,000 over three years
- Exporters who continue to expand into new markets access grants to $450,000 over three years
- Training and development of Marketing Skills added to Marketing activity
- e. Advertising (Google, Facebook, Instagram, Amazon, Influencers, etc.), Overseas Representatives, Marketing Consultants/Agencies, Free Samples, Overseas Travel, Trade Fairs, Overseas buyers, IP & Trademarks.
- Beyond EMDG, there are a raft of State and Local alternatives, i.e. Export assistance grants NSW, Tech Industry Grants NSW, MVP Innovation NSW, Launch Vic, Futures Industry Manufacturing Investment (30% up to 500K), Regional Grants Vic, Business Expansion Grants (10,000 for those impacted by Covid).
- Within the budget other areas: 1.9 Billion for co-investments aimed at energy efficiency & emissions reductions
- Turnover less than $20 M & Export Ready
Further information is available at*: Smart company: https://www.smartcompany.com.au/partner-content/articles/small-business-industry-grants-list/
While grants and budget incentives were all positive stimuli for the economy, accessing the right grants requires research and diligence to deliver ROI. Despite best government endeavours, the grant application and reporting processes can be resource hungry and so it is best to be very clear up front which to go for and which to park.
Changes to EMDG provide exporters new sources of funding and greater certainty of grant allocation but are best managed by leveraging specialist resources. Finally, it’s suggested you look for opportunities where a consortia approach to leveraging grants can be executed. The University of Melbourne, PWC, and The Victorian Government approach to creating and Arts innovation hub was one great example shared – there will be others.
Domestic and International markets – 2021 and beyond
Will 2021 be like drinking from a fire hose? Or has the growth estimates completely underestimated the lag effect of COVID-19 and overestimated the likelihood of an effective vaccine?
A range of forecasts and futures assessments led the discussion:
- AUS will grow to 4% or more in GDP in 2021 (Fin review)
- 1 Million fewer people living in Aus by 2022 than previously forecast (Business insider)
- China and India to bounce back to 8.2% and 6% respectively
- University sector still grappling to replace foreign students
- “Retail may be permanently damaged as the shift away for bricks, and mortar retailers to online retail has been accelerated” (AMP Capital)
- Travel changes (International in the bubble and domestic less frequent, including the trend for work from home)
- Domestic construction (10,000 new first home grants and extra 14 Billion to bring forward infrastructure investments)
- Cybersecurity (205 Million extra) on top of programs to support Digital Adoption
Opportunities by industry sector were highlighted leveraging work from Mc Kinsey Group:
Even with the uncertainty, several opportunities were agreed:
The virtualisation of sales, marketing, and service delivery has increased opportunity to achieve scale and depth of communication. While Tourism, Arts and Recreation, Accommodation Services, and Retail have all been hit in the short to medium term, other segments like Healthcare services, Security and Safety, Utilities, Information and Media, and Infrastructure construction are expanding. China, India, and many other global markets are predicted to bounce in 2021, so the message is be export-ready and digitally-enabled to take advantage of these opportunities.
With reductions in travel costs, facility costs, and areas like physical event costs, budget is available to invest in alternate channels to market. For example, leveraging LinkedIn more extensively during the pandemic period has become a more powerful source of establishing position and creating Sales ready opportunities.
Reflect, reassess, and look forward
As we close out 2020 and plan for 2021, the pause has provided us with an opportunity to reassess and ask: What sort of company do you want to be as you transition to the other side of COVID? What kind of physical office environment makes sense, and how will you support remote and flexible working? What types of resources will you need in the future? What will the mix of the team look like, i.e. should you be leveraging government support to hire many younger workers or stay the course and hire fit for purpose? And for the existing team, how do you sustain your most important assets, your people, in a productive, safe, and enduring way?
When asked what do you see as your highest priority, our CEO’s and business leaders were unanimous that all businesses need to be taking every opportunity to re-engage with their staff,as well as their customers. Keeping your teams engaged (especially younger team members), and prioritising internal communication as well as external Marketing is seen as critical.
Reflecting upon the current situation, one industry leaders added the need for kindness as one of the most critical inputs to success. In this, I am confident Robert Kennedy would have agreed.
Four steps to accelerated growth in 2021
I recommend you reflect on these things:
- Objectives, strategy, and tactics are interconnected concepts so as you reassess for 2021, consider them holistically.
- In the context of the budget forecasts and global trends review and reset your objectives for 2021 and beyond.
- Take a deeper dive on where the opportunities lie, those segments and geographies with a lower uncertainty and higher likelihood of sustained growth to reset your strategy. Ask yourself, “what is the most profitable problem for us to be solving in 2021, and where we can leverage our strengths and sustain our position?”
- Review the opportunities now available to you, to leverage new sources of investment funding in the form of grants and or rebates to build capacity and supercharge your sales and marketing. Communication is key, so invest in building digital and virtual delivery capability. me made this scary jump early and are so thankful we did!
Whilst we live in interesting, even uncertain times, we all benefit from sharing of ideas and finding ways to support each other. Remember, the farther you look, the faster you go.
*Extended grant information:
Grant ready: https://grantready.com.au/
Grant Guru https://grantguru.com.au/
G E Maker: https://www.gemaker.com.au/find-funding/
Federal government: https://business.gov.au/Grants-and-Programs
Victorian government: https://www.business.vic.gov.au/support-for-your-business