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Optimism among regional businesses is growing as they increasingly identify opportunities for growth through innovation, according to new research.
The Commonwealth Bank’s Regional Business Insights report has revealed that almost half (49 per cent) of regional businesses are identifying opportunities for growth, driven by a greater focus on creativity and innovation.
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The latest Innovation Index, which is based on 15 different measures of management capabilities and entrepreneurship, and is ranked on a scale of -100 to 100, has risen to 32.2 for regional Australian businesses, compared with 25.5 in the previous year.
The research revealed that:
- 48 per cent of regional businesses are “innovation active” (implementing genuine innovation rather than just improvements), compared to 46 per cent of metro businesses.
- 62 per cent of regional businesses now evaluate employee creativity/innovation skills as part of their appraisal process.
- 58 per cent of regional businesses report that they have employees who are not afraid to take risks and fail.
- 49 per cent of regional businesses said there was opportunity for business growth and/or increased staff numbers, while 11 per cent said there were no opportunities and 9 per cent were not sure what opportunities were available.
- 57 per cent saw expansion as their biggest opportunity, while 24 per cent said they were either unsure about future opportunities, wanted to keep business stable or saw no future opportunity.
- 25 per cent of regional businesses said strong market or industry performance created opportunity, while 21 per cent said population growth was creating opportunity and 14 per cent said there was opportunity as a result of increased infrastructure.
Commenting on the findings, CBA’s executive general manager for regional and agribusiness banking, Grant Cairns, said: “The upward shift comes as nearly two-thirds of regional businesses now evaluate employee creativity and innovation skills as part of their appraisal process, while more regional businesses also report that they have employees who are not afraid to take risks and fail.
“What this means, really, is that businesses are trusting their employees to try new things in order to better meet the needs of their customers. Businesses are recognising that staff have valuable insights into what customers are looking for and where there may be opportunities.”
Mr Cairns also noted: “Australia’s growing population, Asian demand for our high-quality food and consumer products and the increase in infrastructure spending are underpinning optimism in regional Australia and creating a knock-on effect of new openings for a range of industries.”
NAB’s Monthly Business Survey reported “little change” in Australian business conditions and business confidence last month.
“The business confidence index edged down 1 point to +6 index points in June, continuing an around-average trend after easing back in recent months,” the survey report read.
However, the business conditions index rose by 1 point to +15 index points after a pull-back in the previous month.
NAB’s research noted that, overall, conditions remained highly favourable, with the index around 9 index points above the long-run average.
The bank attributed the result to increases in trading and profitability indices (3 and 5 points, respectively) at the same time as a 4-point drop in the employment index.
Meanwhile, CBA revealed that regional businesses consider competition (27 per cent) and government regulation and red tape (24 per cent) as the greatest challenges facing their business.
“Online business is a double-edged sword in regional Australia. While it opens up the potential to trade outside local boundaries, it also gives competitors greater access to regional communities and that’s a significant challenge for many regional businesses,” Mr Cairns observed.
[Related: Business confidence steady in June]
