New research from Vista Australia – partner to Australian small businesses, startups and entrepreneurs – has revealed that we’re a nation of risk takers when it comes to small business ownership, especially in the early days of setting up a business.

Released today, the Vista 2023 SMB Report explores how Australians have approached starting up their business, how they have fared over the past 12 months, and sentiment towards critical areas such as hiring, upskilling, and areas of investment in 2023.

Despite the well-documented factors recently impacting business health such as inflation, cost of living pressures, record low unemployment and supply chain woes, SMBs are seemingly putting it all on the line in a bid to get ahead. However, optimism for the year ahead remains, with nearly one-in-two Australian SMB owners (48%) feeling optimistic about 2023.

The report has also found a marked difference between metro and regional based businesses in outlook and optimism for the year ahead, with 47% of rural businesses feeling positive about 2023 compared with only 43% of SMBs in metro areas.

Risk-taking Australian SMBs

The research found that the majority of Australian SMBs are ‘winging it’ when starting their operation with 3 in 5 (60%) citing having no business management, ownership experience or skills at the outset. In fact, only 9% were seasoned entrepreneurs before setting up their own gig. For 2 in 5 of SMBs (41%), the business began as a passion project which then turned into a mainstay commercial enterprise, and for 1 in 3 (32%) it developed out of an idea conceived at a previous job.

Commercially-speaking, a staggering 4 in 5 (82%) of SMBs were self-funded – only 7% have taken out a loan and 9% have borrowed from ‘the bank of mum and dad’ or family.

Breaking down the research further, female SMB owners were found to be bigger risk takers than their male counterparts, with only 34% having had previous business management, ownership experience or skills, compared to 50% of male SMB owners.

The year ahead: business outlook and areas of investment

There is an air of apprehension among SMBs coming into the new year, with inflation (48%) and the potential recession (29%) the biggest worries for 2023. Despite one in five (20%) SMB owners admitting they’re feeling hesitant and almost one in four (22%) feeling nervous about 2023, they are still willing to invest to get ahead.

Nationally, SMBs’ focus this year is on growth (58%) and recovery from 2022 (43%), while one in five (21%) see innovation as the big opportunity for the year ahead.

Upskilling will be a key focus of 2023 for SMBs, with 40% confirming it’s an area of investment – with female-owned businesses leading the charge at 44% (vs 32% male-owned). A quarter (26%) of SMB owners are looking to learn new technical/digital skills (i.e., AR/VR, automation, data, IT) in the next 12 months, while one in five SMB owners (20%) are focused on leadership as their main area to upskill.

More than a quarter of SMBs (28%) see marketing as the biggest opportunity for 2023 – with 30% investing most of their marketing spend into social media specifically, followed by 13% investing in their website. SMBs will also be focusing on networking opportunities (24%) and investment in product and resources (20%), confirming that despite hesitation coming into the new year, there is still a focus on investment.

Regional vs metro

In the regions, one in three (38%) SMB owners confirmed they will be learning a new skill in the next year; however, the focus will be on upskilling on existing capabilities (55%) as the main priority.

In a bid to sustain business and even grow, regional and rural based SMBs will be focused on reaching new customers by investing in social media advertising (30%), enabling them to tap into a broader audience.  

“SMBs have been through tough times in recent years – from natural disasters to an uncertain economy and rising inflation, it’s enough to dampen anyone’s spirits. Yet, by and large, SMBs remain stoic in this year ahead. They were willing to take risks to succeed in start-up mode, and they certainly aren’t shying away from investing in 2023 – it’s encouraging to see that so many SMB owners are continuing to look into the future and choosing to upskill and invest, even in uncertain times”, says Marcus Marchant, CEO of Vista Australia.