Small businesses innovate to beat challenges of 2020

By Katherine O'Chee ·

While 2020 has been a tough year for small businesses, a whopping 92% still hold high hopes for the future, new research shows.

According to the Amazon Launchpad Innovation Report released this week, a strong sense of resilience has underpinned this optimism. 

For one, 28% of small to medium businesses (SMBs) said they turned the COVID-19 shutdown period into an opportunity to innovate. 

Among the SMBs who embraced innovation, some found new revenue streams (27%) or launched online as an eCommerce business (23%); while others created products (17%) or transformed existing ones (18%). 

A further 35% of respondents said isolation gave them a chance to review and revamp their business plans, while 38% said it helped them focus more on creativity. 

These findings were based on surveys with over 1,000 SMBs. 

Innovation hurdles

However, the report also found that on a practical level, some challenges stand in the way of businesses making strides to innovate and adapt. 

“More than a quarter of SMBs (29%) said that the lack of available funding is the biggest barrier to innovating or growing the business for the remainder of 2020 and more than half (55%) lacked guidance and mentorship during this time,” Amazon Australia’s head of Launchpad, Chadd Ciccarelli said.

Launchpad is Amazon’s platform for Aussie startups, entrepreneurs and SMBs to sell cutting-edge products to consumers. And it’s now offering five grant packages, each worth over $80,000 AUD (including $20,000 in cash and access to mentors), to help address those concerns around funding and support. 

As for why small businesses need that extra capital, respondents listed the following as their top reasons: growing digital presence (15%), expanding into the overseas market (15%), staffing (15%), creativity (11%), and eCommerce (10%). 

More ways to access business finance

Besides Amazon’s grant, there are also other ways for Aussie SMBs to get their hands on funding as they look to innovate or transition back into ‘business as usual’.

  • Seek help from the government: Depending on which state your business is operating in, you may be eligible for a recovery grant. In NSW, government grants range between $500 to $3,000, and aim to assist with expenses such as temporary physical changes (like plastic barriers at checkouts), staff training and counselling, cleaning services, and digital solutions (like eCommerce or business websites). Meanwhile, in VIC, where coronavirus cases have resurged and Stage 3 lockdowns have been reimposed for Melbourne, affected businesses can apply for a one-off $5,000 grant.

  • Consider a business loan: Business loans are another handy way to obtain additional working capital to cover costs like stock and staff wages. Bear in mind, there are various types of loans to fit different business needs. For instance, while a line of credit is better if your SMB has an uneven cashflow, a term loan makes more sense if you already know how much you’re going to need upfront. 

Page last updated October 24, 2020

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The good news is, the government’s SME Loan Guarantee Scheme is still up and running until 30 September. Under this scheme, the government guarantees 50% of unsecured business loans of up to $250,000 from participating lenders, so accessing extra finance should be much easier for small businesses.  

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Katherine O'Chee
Katherine O'Chee
Money writer

Katherine O’Chee is Mozo’s international money transfer and forex expert and business banking writer. She keeps Mozo’s readers on top of the latest news and writes in-depth features to inform and help Australians make smarter financial decisions. Her work has been published in major media outlets including Sydney Morning Herald, SBS News and Bangkok Post. She has a Bachelor of Arts (Media and Communications) from the University of Sydney.