Impact of Grants on Small and Medium Businesses in Australia

Small businesses are the backbone of the Australian economy, playing a crucial role in driving economic growth, employment, and innovation. In this article, we will explore the statistical impact of small businesses on the Australian economy, delve into the significance of grants in supporting their growth, and analyse the effectiveness of grant programs in supporting small businesses. Limited statistical data is available regarding the effectiveness of grant programs; however, a recent analysis of the Entrepreneurs’ Programme was published by the Department of
Industry, Science, Energy and Resources following the program’s termination. This program was a valuable support platform for small businesses looking to boost their business and notably was replaced with the Industry Growth Program, a $392.4 million program, released in the latest Federal Budget.

Set to launch in late 2023, the $392.4 million Industry Growth program will support Australian small businesses and startups in commercialising their ideas and expanding their businesses. It will provide advice and matched grant funding for projects in priority areas of the National Reconstruction Fund such as renewables, medical science, transport, agriculture, resources, and defence. The program will feature contracted advisers, industry expertise, a grant recommendation committee, an Executive Director, and a Centre of Expertise for enhanced commercialisation capabilities.

STATISTICS AROUND SMALL BUSINESSES IN AUSTRALIA

As of 30 June 2022, there were over 2.5 million actively trading businesses in Australia. With the Australian Bureau of Statistics defining small businesses as those with less than 20 employees, 97.5% of all Australian businesses were small businesses in June 2022.

Small businesses have a massive impact on both our domestic and international markets. To help put it into perspective, here are some quick stats on small businesses and their impact –

  • Provide jobs for over 5 million Australians – that’s two out of five private sector jobs
  • Contribute over $500 billion to Australian GDP – nearly one third
  • Employ 42% of all apprentices and trainees in-training

Statistically, a small business owner earns less than the average full-time wage, and 61% of small business owners work 39 hours or more per week. Important to also highlight is that 43% of micro and small businesses are non-profitable. If small businesses are struggling in today’s economy, with more than 2 out of 5 micro and small businesses not turning a profit, what support programs are out there and how do they help?

EXAMPLE: ENTREPRENEURS’ PROGRAMME

As mentioned earlier, the objective of the Entrepreneurs’ Programme was to connect small and medium businesses with the capabilities and networks that they need to grow, innovate and commercialise in Australian markets, and/or markets in other countries.

Since launching in 2014, the Entrepreneurs’ Programme has provided access to expert advice and financial support through grants to help progress a business’ goals. Some quick stats:

  • Provided advice and grants to over 22,000 businesses over the five streams of the program;
  • On average, for every $1 of grant funding provided, a business raised $3.75 of private capital, under the Accelerating Commercialisation branch of the program;
  • An average increase of 3.5 new jobs and a $1.47 million in turnover for businesses, per project under the Growth branch.

Overall, the Entrepreneurs’ Programme cost $484.2 million to implement since the 2014-25 budget and affected over 22,000 businesses. Reason for the cessation of the program was to implement the Industry Growth Program, much like the Entrepreneurs’ Programme, which aims to target the priority areas of the $15 billion National Reconstruction Fund. Objectives of the National Reconstruction Fund are to target the diversification, and transformation of Australia’s Industrial sectors.

THE BURDEN OF GRANT APPLICATIONS ON SMALL BUSINESS APPLICANTS

Considering 61% of small business owners work more than 39 hours a week, effective time management is crucial for businesses. Knowing how to efficiently allocate your time to differing aspects of your business is important for successful growth. When it comes to seeking and applying for grants, this often seems troubling and time-consuming to those searching, so will often become a lower priority. Here we will investigate the reviewal of the application process for the Export Market Development Grant.

EXAMPLE: EXPOR T MARKET DEVELOPMENT GRANT (EMDG) 

Since 1974, EMDG has helped more than 51,000 unique small  and medium size Australian businesses (SME)s promote and market their products and services to more than 180 countries worldwide. This was another program that was discontinued in the latest federal budget and was a critical support platform for businesses looking to promote and export their products to international markets.

However, the EMDG Program did have its drawbacks when it came to applications. The average application would take 13.3 hours to complete, with applicants stating that they had to carefully budget their time to complete a meaningful application. During Round 1 of the program, over 5,300 applications were submitted, with 75% of those lodged by agents on an applicant’s behalf. In other words, this means that three out of four participants likely contracted the services of grant-writers or external consultants to assist in the preparation of their application. Some more statistics that applicants noted in an Operational Review, that the program moving forward should have:

  • Reduced complexity (65%)
  • A change from an audited reimbursement scheme to an upfront grant program. Useful in reducing workload for applicants (86%)
  • Resources or training to putting together a plan to market (64%)

Small Businesses looking for grants should be aware that although grant applications can sometimes be complex and time-consuming, they are also a valuable source of support for those looking to boost their company. Grants can aid in all aspects of your business; from attracting and retaining skilled workers, all the way to helping with international exports of your products. So, if you see a grant that you may be eligible for, be sure to weigh up the cost-benefit ratio of submitting an application, you won’t know if you don’t try!