A world of opportunity
Cracking the export market is becoming easier than ever for SMEs. Take your brand to the world in 2018 with new grants, easy finance and advice from those who’ve done it.
In the past year, the federal government has turned its focus to helping launch Australian SMEs
on the world stage, with government-backed finance and new grants for advice and training. Here are four key things you should do in 2018 to explore or expand your export opportunities.
Get Out There
If your business doesn’t have a strong presence on the right digital platforms you may as well
be invisible. Recognising this, the federal government has rebooted the Australian Small Business Advisory Services program to focus on helping SMEs with digital expansion.
Launching the revamped program in December, then Small Business Minister Michael McCormack1 said the ASBAS program has been overhauled to focus on helping small businesses to get online
and reach out to new markets for their goods and services.
“Commonwealth Bank research2 shows up to 80 per cent of small and medium businesses are delaying the adoption of digital technologies which could provide long-term benefits to their business,” he said.
The ASBAS would allocate $18 million in grants over three years to fund training and advice for SMEs to seize new opportunities and grow their business through digital platforms.
One such platform, the Chinese online shopping behemoth Alibaba, opened its first Australian office in Melbourne in February last year, bringing new opportunities for local business. Austrade has a strategic collaboration agreement with Alibaba Group which aims to expand access to China for Australian e-health, financial services and event management businesses.
Applications for the ASBAS Digital Solutions grant open on January 23 and close on March 6.
In the fast-paced global marketplace, new contracts could put unexpected pressure on expanding small businesses, leaving them looking for quick access to finance.
A broker can help with bank and non-bank small business loans, and can provide information about other options for SMEs who may require an additional alternative solution. One such alternative
is through an entity called Efic, the Australian government’s export credit agency.
In 2016, the government introduced a new arm of SME lending aimed at helping small businesses grasp export opportunities.
The Small Business Export Loan, administered by Efic, provides unsecured loans of $20,000 to $350,000 for businesses with turnovers between $250,000 and $10 million. The loans fund export contracts or purchase orders which should otherwise impact on an SME’s cash flow or working capital.
Efic CEO Swati Dave said some small businesses found it hard to get export finance and felt lenders did not understand the complexities of managing working capital though the export cycle.
“It is in cases like these where Efic is able to help with expertise in exporting and the ability to support businesses when their bank may not be able to assist,” Ms Dave said.
Efic’s website estimated online applications could be made within 30 minutes and were assessed on an SME’s ability to repay, rather than ability to stump up collateral.
An early beneficiary of the export loan was WA water purification company Natural Water Solutions, founded by Quenton Leach. Leach said the company’s sudden expansion into the export market came via an Alibaba enquiry from a Filipino company who wanted to distribute the product locally. Orders ramped up quickly, putting a squeeze on finances.
“If we hadn’t received the funding, there’s no doubt that we would have had a difficult time balancing our orders and cash flow,” Leach said. “The whole idea of the Small Business Export Loan is to give you access to money reasonably quickly without too many challenges and that’s what it did for us.”
Knowledge is power, and doing business in the giant marketplaces of Asia could be very different to doing business at home. From the phenomenal power of Chinese social media influencers, to cultural preferences in flavour, style and colour, every piece of information helps you position your brand for success.
Late last year Alibaba Group Australia and New Zealand held its first e-commerce expo in Melbourne. Managing director Maggie Zhou said the expo was an opportunity for Australian small business owners to learn about how to access and succeed in the Chinese market.
“Australian products are highly regarded in China and continue to attract the attention of millions of Chinese consumers who demand high-quality goods,” Ms Zhou said.
Alibaba plans to roll out more e-commerce expo events around Australia this year, with dates to be announced on their website.
Knowledge of cultural traditions can also help you position your brand. Margaret River winery Flametree Wines leveraged Chinese holiday gifting traditions to build a major export market to the country. Free-trade related drops in import tariffs has significantly boosted the competitive edge of Aussie wines
in recent years.
SME import-export networking events could also be a valuable source of information, providing learning experiences from business owners on the same path.
Another handy source of information is the Export Essentials app, launched by Efic and the Export Council of Australia. Aimed at SMEs, the app is updated regularly with checklists, calculators and advice to lead business owners through the basics of planning for export.
Innovation can be the key to a successful export enterprise. And in manufacturing, some of the most innovative firms are those that have upskilled to take advantage of specialised defence industry contracts.
The federal government has announced plans for a defence industry strategy in 2018 that aims to help these niche manufacturing firms grab a bigger slice of the international defence market.
Writing in a defence supplement in the Australian Financial Review3 in November last year, Trade Minister Steven Ciobo and Defence Minister Christopher Pyne said AusTrade and Efic have been tasked with increasing defence exports.
“There is a major role for specialised small to medium enterprises to supply niche products and services to global value chains in the defence sector,” they wrote.
One Australian firm already involved in supplying the US Joint Strike Fighter was Heat Treatment Australia, which was founded in the 1970s as a traditional manufacturing firm. When Australian manufacturing went into decline in the ’90s the firm invested in research and development and reinvented itself. It now supplies heat-treated components for the US Joint Strike Fighter program
and – after opening a facility in the US in 2016 – is looking to expand into aerospace, renewable energy and high-performance vehicles.4
1 In a pre-Christmas cabinet reshuffle Craig Laundy was appointed the new Minister for Small and Family Business. Michael McCormack became Minister for Veterans Affairs and Defence Personnel.
2 Majority of Small Businesses Delay Adoption of Technology Offering Long-Term Benefits, Commonweatlth Bank Newsroom, 19 September 2016, www.commbank.com.au/guidance/newsroom/small-businesses-research-tech-201609.html
3 Ciobo, S, Pyne, C, Government’s export strategy has suppliers poised for growth, Australian Financial Review – Defence supplement, 29 November 2017, pp1, https://www.efic.gov.au/media/4231/defence-oped-ministers-ciobo-pyne.pdf
4 Passmore, D, Risks paying off in new age of manufacturing, The Courier-Mail, 3 January, 2018, pp2.