Australia’s major industry sectors continue to be shaped by global economic trends, causing tough times for some businesses. Thankfully, there are ways for small business owners to succeed in a period of disruption.
New technology and the impacts of globalisation have changed the way we do business in Australia.
Growth statistics for industries that were once considered stable have fallen, causing some business owners to consider throwing in the towel.
This activity is sometimes termed ‘market disruption’, and it seems to be happening more regularly as new business models and technologies arrive on the scene.
But industry decline due to market disruption doesn’t necessarily spell the death of that industry. Instead, embracing change and evolving your small business operations can make sure you succeed even as others fail.
To help you achieve just that, we spoke with senior analysts from research organisation IBISWorld to discuss four key industries that have suffered the most in terms of shrinking employment numbers, and how small business owners might buck the trend in each.
Far from being breaking news, the printing industry has been under threat from digital challengers for a long time – and the industry’s revenue is expected to decline at an annualised 2.4 percent over the five years through 2019-20, to $7.1 billion.
But print is a classic example of an industry that is shrinking but is expected to eventually stabilise. As it does so, niche categories within the sector may even begin growing.
IBISWorld Senior Industry Analyst Yin Yeoh pointed out that “as online consumer spending continues to grow, increased demand for printed labels, packaging materials, stickers, cartons and tags from wholesalers and retailers will likely partially offset declining demand from other markets”.
“Retail activity is projected to increase at a gradual pace over the next five years and a lack of digital substitutes for these items provides an opportunity for industry operators to focus on this core market,” said Yeoh.
For any local printing operations, Yeoh recommended they “boost their economies of scope and improve their service offering by bundling design, marketing and communications consultancy, and distribution services with their printing services”.
Manufacturing has declined by 0.4 percent over the past five years as labour moves offshore and Australia trends towards an almost completely service-driven economy.
But there’s still plenty of opportunity for niche manufacturers to fill the void.
And, as local labour costs far outstrip offshore markets, manufacturers must take risks and identify those gaps in the market that will allow them to create specialty products that can be sold with a healthy margin.
They can also look to use modern tech to drive efficiencies within their operations.
“Business owners need to invest in technologies that enhance productivity,” said IBISWorld Senior Industry Analyst Liam Harrison.
“Advancement in areas such as AI has allowed for increased automation in software, and this has allowed innovative businesses to reduce labour requirements for administrative tasks.”
Harrison also recommended managing climbing power costs with investment in technologies.
“High power prices over the past five years have rewarded manufacturers that invested in energy efficiency and renewable energy systems.
“The projected trend of power prices over the next five years is expected to continue to reward investment in renewable energy and energy efficiency.”
In a multi-faceted industry like wholesale trade, figuring out how to adapt to change is far from clear cut.
Wholesale trades have historically survived by subtly redirecting their strategy and their offering – sometimes pivoting their entire business to a more profitable target market.
IBISWorld Senior Industry Analyst Michael Youren recommended that “industry players should look at markets that have grown over the past five years, and target their product offerings accordingly”.
“For example, the agricultural sector has grown over the past five years – despite some difficulties recently,” said Youren.
“Related product types, such as tractors, have increased as a share of industry revenue over the past five years.”
With an annualised 1.4 percent decline over the last five years, wholesale textiles is an example of an industry with a more negative long-term outlook.
For such businesses Youren recommends small companies “establish relationships with overseas manufacturers directly”.
But this approach also comes with a warning.
“Working directly with overseas manufacturers can increase the amount of work required for smaller companies and may prove difficult for some.”
Agriculture relies heavily on water, which means this industry has always been vulnerable to our drought-prone conditions.
In addition to water availability, agriculture is also being hit by globalisation, as overseas produce becomes more affordable to import.
The result is reflected in the expected annualised 9.5 percent decline of the cotton ginning industry over the five years through 2019-20.
Likewise, nursery production is expected to decline at an annualised 1.9 percent over the same period.
IBISWorld Senior Industry Analyst Matthew Reeves recommends small businesses struggling to compete with imported goods instead focus on uniquely Australian products.
In the case of floriculture, Reeves said that “while the industry is declining overall, the major growth area is in the growing of wildflowers”.
“These flowers are by their very nature more suitable to the tough growing conditions currently faced by industry participants,” said Reeves.
“Furthermore, they account for virtually all exports.
“While exports are a tiny part of the industry, they are expected to grow at an average of 17.9 percent a year to total $9.1 million in 2019-20.”
Ultimately, it doesn’t matter whether your industry is currently declining or growing.
Any market can shift dramatically, sometimes in a very short period of time, so it pays to have strategies in place to cope.
Some might even suggest that just because things seem fine for now that doesn’t mean you should rest on your laurels.
Make business innovation a priority for your team, and you’ll be improving your chances of success no matter what industry you’re in.