Success as an Australian SME business today is less about being a good financial manager and more about passion, persistence and having a growth mindset, according to Moments that Matter, a recent report from NAB.

According to Kwanghui Lim, Associate Professor of Strategic Management, Melbourne Business School, a growth mindset is essential to SME success.

Lim comments: “Entrepreneurs are focused on growth or building something that is scalable or that can be taken to other markets.”

Success isn’t just about getting bigger, it’s often about having a mindset that’s responsive to change. Over 800 Australian businesses were asked: “What character traits do you need to be a successful SME?’ and some results were surprising

1. Be prepared to work really hard

Fifty-six per cent said you need to ‘be prepared to work really hard’, as running a small business can demand long hours and for some, well beyond those of a standard full-time job. 44 per cent of SMEs agreed that they have this trait, but far less agreed they have the traits below.

2. Be passionate about your business, and be persistent, no matter what

Could passion, purpose and persistence be the new three Ps? According to forty-five per cent of SMEs in NAB’s report, a ‘never give up’ attitude against adversity and an unwavering belief in your business are key ingredients to success. One SME owner, six years in hospitality, commented: “Passion is what gets you started but it’s perseverance that
gets you through. You can burn through the passion pretty quickly.”

3. Be good at dealing with customers, especially when they’re being difficult

The saying ‘the customer is always right’ certainly applies for SMEs, with 43 per cent agreeing this is key to success. Turning a negative customer experience into a positive one can result in positive word of mouth, and it’s also possible that a difficult customer can become an advocate.

4. Be a life-long learner and update your skills

Being dedicated to learning and enhancing your skills isn’t just about going back to university, it’s also about using mentors, networks and competitors as opportunities to learn – and another tool is having an open mind. 42 per cent of respondents agreed this is key to success and they also say it’s important for your staff as well.

5. Be willing to fail and learn from your mistakes

A bad day for an SME owner can also be a great day for business, if you look back at what went wrong and make proactive plans to address any issues head-on. No pathway to success is smooth, and 41 per cent of respondents said this willingness to accept failure and learn is a key character trait for SME success.

6. Strive for continuous improvement

Good, better or best? It’s not a fixed state, according to 38 per cent of SMEs, who say the key to success is always striving for continuous improvement, no matter how great things are going in your business.

7. Stay calm under high pressure

Whether it’s meeting deadlines, juggling customers or managing stock levels, employees and finances, SMEs will always face stress and pressure tests. 38 per cent of SMEs say the key to success in these situations is staying calm – which helps with better decision-making.

8. Be open to change and embrace it

Another characteristic of a growth mindset, rather than a fixed mindset, is being open to change. 38 per cent of SMEs say that to be successful you should go further and embrace change. So when a competitor offers a new product in your category, or sales begin to drop in one of yours, embrace the change and look at what the market is telling you. Even better, try to anticipate the next change and get ahead of the game.

9. Adapt quickly to changing market conditions

We know that in the age of disruption, SMEs are highly susceptible to competition. With small start-ups entering all categories and worldwide online start-ups playing against Australian SMEs, your ability to respond and adapt to change is key to success, according to 38 per cent of respondents.

10. Be a very good financial manager

It goes without saying that good financial skills are a key mindset and character trait of successful business people, and while 36 per cent of respondents agreed with this, no one can perform well in every role. If financial management isn’t a key strength, hiring someone to perform that role, or to help with some elements of financial management, could be a proactive way forward.

Above all, the Top 10 Characteristics of Successful SMEs show that successful business owners are smart, resilient and, above all, extremely hard working.

Angela Mentis, Chief Customer Officer, Business and Private Banking, NAB, commends the efforts of SMEs: “The findings show that despite intense workloads and dealing with bureaucracy, many of you are waking up every day energised by your customers. You are passionate, good at dealing with challenges and you know success comes from being willing to fail.”

This paints a picture of what makes a successful SME business owner, but what characteristics define a successful business?

Aside from good financial management, a successful business has positive word of mouth, loyal customers and happy employees, according to NAB’s report.

Fifty-eight per cent agreed that ‘good financial management’ was a key characteristic of a successful business, followed by ‘positive word of mouth’ (56 per cent) and the ‘ability to gain repeat business’ (52 per cent). ‘Productive staff’ (49 per cent) and ‘happy staff’ (45 per cent) were also key characteristics of business success.

However, qualities of the owner also play a key role in the success of the business. ‘Years of experience in business’ (38 per cent), ‘strong leadership’ (46 per cent) and the ‘ability of the business owner to play many different roles’ (40 per cent) are also important success drivers. ‘Efficient internal systems and processes’ were favoured as a success characteristic by 33 per cent of respondents.

In terms of successful business strategy, 33 per cent also said the ‘commitment to change and innovate’ was a key ingredient to success, particularly in today’s competitive SME landscape.

Alan Oster, Chief Group Economist, NAB comments: “Small business is an important part of the Australian economic landscape. I hope the Moments that Matter whitepaper and our regular SME Business Survey will help and support this vital cog in our economy.”