Business

Monday 12 October

I’ve got the best job in the world.

I get to walk into amazing businesses, meet people who are passionate and experts in what they do, and see the work happening across a genuinely national business landscape. It’s a great position to get a more nuanced view of the current economic climate.

Recent figures from NAB’s monthly Business Survey show that business conditions and confidence are both in negative territory for the first time since 2020. But a national number can only tell you so much. The fact is, the outlook can look completely different, depending on where you are.

For instance, there are definitely states experiencing much softer demand right now. But when I visited Queensland recently, you could see the significant momentum around the Olympics, infrastructure and population growth. NSW is also getting a lift from its new Western Sydney International Airport. It’s a massive positive for a whole lot of businesses there.

Those differences aren’t just at the state level though. Markets, sectors, industries – even individual communities – can vary enormously. It’s why I travel as much as I do. Inevitably, we have these very local conversations with business customers, and you don’t necessarily know what you’re going to hear until you’re in the room.

Why customer obsession still pays

This more nuanced view is why I don’t think there’s as much financial stress in the market as people sometimes assume. But equally, I think there’s less confidence than people realise.

That lack of confidence manifests in the way businesses think about capital expenditure, expansion and investment.

You can see it among their customers too. There’s understandable concern about what’s happening in the world at the moment and people are sitting pretty tight. But that’s not the end of the story. These things come in cycles and there are still good stories everywhere. The question is: how do you make your business one of them?

The businesses I see succeeding right now aren't necessarily the ones making big bets. They're the ones staying close to their customers, looking carefully at where demand is emerging and finding new ways to apply what they already do well.

A lot of it comes back to staying true to your market and connected to your customers. Businesses that are obsessed with understanding what their customers need and whether their proposition is still relevant will be better placed to respond as conditions change.

The challenge is to keep moving without overextending – staying true to what you do, calibrating where necessary and finding new ways to grow without necessarily committing significant new capital.

Growth may be closer than you think

It’s about looking for opportunities in less obvious places. We’re seeing businesses think more laterally about growth – moving towards markets where they see stronger opportunities.

But it goes beyond geography. Businesses are asking: how can we work our existing asset base harder? Can we expand into an adjacent part of the value chain?

There are major themes that come up almost every day. Defence and data centres are two obvious examples. Defence spending is on the rise, with $6.8 billion in additional funding over the next four years. Data centres have also been running hot, with investment in construction and expansion increasing for eight consecutive quarters, according to the ABS.

But the opportunity isn’t necessarily about becoming a major player in one of those industries. It’s about finding where your capabilities fit within the value chains being created around them.

With data centres, for example, we're seeing customers that manufacture fireproof coatings applying those products to cables used within the centres themselves. We're also hearing from security businesses exploring opportunities in traffic management, car park operations and site security as they respond to the growing activity surrounding these facilities.

It’s the same for defence. We have businesses making batteries used in submarines and springs used in military vehicles. And it’s not just an Adelaide story. We’re seeing opportunities in Townsville and Perth too.

The opportunity is often not to reinvent the business completely. It’s to ask: how can we get closer to where the money is being spent? These businesses looked at what they already did well and found a new application for it.

Back what already makes you good

From where I sit, a good business before a challenging period will generally still be a good business afterwards.

As Australia’s biggest business bank, I see our role as helping those businesses navigate uncertainty and position themselves for prosperity on the other side – testing their assumptions, understanding the options in front of them and helping them find an appropriate path forward.

We’ve been through plenty of challenging cycles before. Conditions change, confidence returns and new opportunities emerge. Australian businesses always find a way.

Business