[00:00:00] Host – Grace Jennings-Edquist: As growth slows and pressure builds across small businesses, where will new opportunities come from? And is the business sector actually set up to grow sustainably when they arrive? In this week’s episode, Avant Groups, Kate Whitehead explains what the 2026 federal budget reveals about government priorities and where business funding opportunities are likely to emerge then. Ilona Charles, CEO and co-founder of HR consultancy Shilo, explains why so many start-ups and scale ups struggle with people and culture as they grow, and the costly mistakes businesses make when they move too fast. From SoundCartel. I’m Grace Jennings-Edquist, and this is Business Essentials.
What the 2026 Budget means for business grants and funding
Our first guest is Kate Whitehead, managing director of strategic grants and Government funding advisory at Avant Group. The May federal budget has sparked a major debate around tax reform, productivity and business confidence and what next for government funding and business grants. Kate Whitehead says businesses that understand where government priorities are shifting, whether that’s innovation, advanced manufacturing, clean energy or technology will be far better positioned to access future funding opportunities. So what does this year’s federal budget reveal about the future of business grants and government support for SMEs? Kate explains to Nicole Goodman.
[00:01:34] Kate Whitehead: So it’s a bit of a yes or no answer, to be honest. So in some areas we are seeing some improvements, but in other areas we’re also seeing a reduction in decline in support for organisations. So under this new budget, we’re really seeing a refined and focused approach to where funding is going. And it’s very much aligned to industry sectors. So if you fall within a sovereign capability sector, then you’re more likely to get funding than, say, a general small business that’s investing and trying to seek support. So that’s a good thing and it’s a bad thing. I’m not against having a really refined focus and approach to where government investment goes, because it’s obviously a good way of spending government money. Having said that, we’ve also seen some decline in funding. So one of the real disappointments in the budget was a reduction in the Industry growth programme initiative. So that is a long term scheme. It’s had a few different inceptions based on the government of the day, but it used to be called comment back in the day. And then it was the entrepreneurs program. But the IGP in today’s format is the only grant, realistically, that funds what they call the critical Valley of death, which takes organisations through the commercialisation cycle and gets them out into growth and scaling. Really good program. And unfortunately, we’ve seen it being chopped. So that’s one that I was very disappointed to see.
[00:02:49] Kate Whitehead: We’ve seen some amendments to the R&D tax incentive as well. So again, one of the negatives was a cap to the ten year business limit. So if your business is now ten years old, you’re no longer eligible for refunds. And look holistically. I get why they’re doing it. They’re probably looking at it and saying, we’ve been around for ten years. You don’t need that support. But what that does is it Disincentivizes future R&D investment by those businesses? There’s no other way of identifying of what the impact is going to be. And also, it fails organizations that have a longer than ten year commercialization cycle. So medical technologies, clinical trials, they take longer than ten years. So I would not be surprised if we see some backpedaling coming out in the next few weeks around that, particularly around industry sector focus. I’ve got it on pretty good authority that they might be carving out a bio med medtech carve out under the R&D. But again, that’s just another layer of complexity, another layer of legislation, another layer of interpretation. So it’s just going to create problems. And then having a ten year cap on Refundability, all that means is businesses are just going to restructure around it. So again, it’s just adding more red tape, more compliance, more accounting costs. So it’s some positives, some negatives, unfortunately.
[00:04:02] Nicole Goodman: Do you think grant’s policy is becoming more strategic? So less about broad support and more about directing capital towards politically and economically important sectors?
[00:04:12] Kate Whitehead: Absolutely. So Grant’s policy is now industrial policy by another name. So we are definitely seeing alignment of funding going only to those sort of sovereign capability areas, things like defense, clean technologies. There were funds around batteries, no surprises. There’s now fuel fund. So we are seeing all of that grant money going towards those sorts of initiatives in addition to the social based initiatives. So housing initiatives and also things such as, you know, indigenous support across the regions. In the old days, we did see some really good broad based grants available to SMEs. They are gone. Those days are gone. From the federal government perspective, we do still see some of them come through from state governments, though. So for example, Queensland’s got some funds and also Western Australia has some good funding to help SMEs around innovation and investment. So it’s not completely missing out. But unfortunately, states like Victoria, there’s no funding there and there won’t be for some time, for obvious reasons. And Tasmania used to have a few and unfortunately we haven’t seen anything come out of Tassie yet either.
[00:05:10] Nicole Goodman: It’s extremely disappointing. Kate. With that in mind, and with continuous economic contraction and uncertainty ahead, how important are grants and incentives becoming as a source of growth capital for small and medium businesses?
[00:05:24] Kate Whitehead: I think that they should always form part of a growth strategy for any business. It’s one of those things that if you are eligible, you should always be looking to see what might be available to your organisation. However, fitment the time it takes to actually prepare an application can be lengthy, so you’ve got to make sure you’re not wasting time applying for grants that you won’t be getting in the first place. We are seeing some tax based incentives, so the $20,000 instant asset write off that’s now been locked in finally, which is good. So that’s a positive in the budget, meaning small businesses can instantly write off expenses under the 20 K mark, which is great. But you know, outside of that it’s really state dependent. So if you’re in Queensland, for example, and you are manufacturing Queensland has some exceptional programs. They’ve got the Transforming Manufacturing Queensland grant that provides up to $1.5 million, and they’ve already locked in the budget for the next few years. Every six months, this grant is going to open and we’re going to see some serious capital being delivered through Queensland manufacturing. So it’s not all lost, but it really is becoming state dependent because we’re not seeing broad based programs coming from the federal government. Unfortunately, unless you sit within one of those priority sectors.
[00:06:28] Nicole Goodman: What separates businesses that successfully secure funding from those that tend to miss out?
[00:06:34] Kate Whitehead: It’s a few things, obviously, alignment over eligibility. So eligibility is just a must have. There’s no flexibility on that, but alignment of the project and alignment of the organisation against the grant and the merit criterion with the grant. And also the overarching policy is usually pretty critical. We see a lot of businesses, they have great ideas, great concepts, but they may not have the trading history or the scale to deliver on a grant at the level that they’re looking for. They’re not going to be a successful applicant. The business case. So, you know, and I think also in the age of AI, there’s going to be even more and more focus on the feasibility of the program versus the project that the organization wants to undertake. So making sure that the business case really stacks up from a government perspective, jobs growth is always important. So being able to demonstrate that, you know, this will create jobs. And again, I think AI is going to really change the shape of what that looks like in future years, especially with businesses that have, you know, strong white collar job roles. And then also just making sure that the budget, the ask shows a value for money for the government. So, you know, if you are contributing, say, $10 million to a $13 million program versus somebody else contributing $5 million to an $8 million program, well, you unlocking $10 million of private capital against a grant ask of three is going to be more compelling than the other project. So making sure that there’s fitment and also good value for money, which really sells it to government, that you should be the candidate that gets the funding.
[00:07:57] Nicole Goodman: And where do you think the smartest businesses are going to be positioning themselves to align more so with future government funding priorities?
[00:08:05] Kate Whitehead: The biggest opportunity at the moment that we see is definitely in the defence and sovereign capability space. So obviously Australia’s got some pretty strong linkages into the Aukus supply chain. We’re procuring the underwater nuclear submarines. So there’s a lot of funding that’s going to businesses to actually shore up that capability and make sure that we’ve got the capacity to maintain and service this equipment once it’s been procured. So we’re seeing significant funding under that. So, you know, the Didj, which is the Defence Industry Development Grant, that programs continuing $59.1 million for new strategic policy sector grants aligned to that. So that’s a bit of a no brainer. If you’re in defence. It’s certainly a good space to be playing. We’re also seeing funding in the advanced manufacturing and critical technologies sector, so things aligned to those strategic gaps and also advanced technologies such as quantum. And there’s also some budget commitment for artificial intelligence growth centre initiatives. So those sorts of really not just leading edge, but bleeding edge technologies is where you’ll see funding, but for things such as general businesses, retail organizations, fashion brands, those sorts of things. It’s fairly limited to really just the export market development grant. That’s a program that’s been around for over 50 years now, and it’s arguably Australia’s most successful grant program in history, and it delivers something like $5.40 for every $1 invested. So it’s a really strong multiplier. Again, one of the things it feels like it’s fallen short on a few things is the MDG is great, but it’s critically underfunded. So we’ve only seen $110 million committed under that program under the new budget when it’s adjusted for CPI. It should be sitting at over $300 million in funding. So we’re seeing some big broad based grants going to these priority sectors. But then the general support for exporting companies in Australia, we’re seeing that sort of fall flat. So it really is. It’s an unusual time at the moment, that’s for sure.
[00:09:57] Host – Grace Jennings-Edquist: That was Kate Whitehead, managing director of Avant Group.
The HR mistakes startups make (and scaleups repeat)
Now to one of the most common and costly mistakes growing businesses make. Startups are designed to move fast, but according to Ilona Charles from Shilo, which offers HR consulting services, many businesses scale before they’ve built the leadership, capability, culture and systems to fully support that growth. The result? Poor hiring decisions, unclear expectations, weak management and people. Problems that become harder to unwind as businesses get bigger. Nicole Goodman starts by asking Ilona, what are the biggest HR mistakes you see startups making?
[00:10:41] Ilona Charles: Often it is hiring. So with a startup, the first biggest thing on their mind will be as they’re growing. We need people to do the work. And so the biggest mistake there is, okay, we’ve just got to hire people without really thinking about what are the roles we actually need now and into the future? And the future with startups is often a much shorter time frame. So it might not be three years out, it might be six months to 12 months out. So getting the roles really clear, making sure you’ve got your employment contract sorted, whether HR or having some legal oversight that rather than just finding something on ChatGPT, would be a good place to start and making sure your pay and conditions are all sorted right at the start before you even remotely go to putting that first person on. I see this so often that people think, okay, we’re just going to get the people in and then the people problems. People are people, right? There’s always going to be some issues. And the biggest mistake is thinking they can all just be fixed later when it’s actually better just to take a little bit of time at the start to get some of those foundational elements right before you even bring on that first person in a more formal context. Yeah, I think that’s probably the key things that I see.
[00:11:51] Nicole Goodman: Mostly the idea being that businesses should really hire for what they’ll become, not what they are now taking that forward thinking approach. So what does that look like in practice?
[00:12:02] Ilona Charles: Yeah, I think and this is a little bit more gray, should I say, in terms of how you answer this. Because often when you’re starting, you’re hiring for a technical skill set, for example. So you need software developers or you need salespeople. So you’re looking very clearly at the technical skills. But the reality is when you’re working in a startup or a fast growth organization, some of those skills that you need are more people related. So rather than just the technical skills, so you need to be looking to hire people who can cope with complexity, who can cope with the ambiguity and greyness as the company grows, because not everything’s going to be clear when they’re small and things change so fast. So it’s almost the mindset, the attributes of the person that you need to be hiring for, because they’ll be able to grow with you, they’ll be able to deal with the mess, they’ll be able to put some structure around that mess over time and also deal with greater workloads as that work increases. So people who can learn and adapt, not just tick every box on the skills checklist. I think also being upfront about where the business is heading. So setting that expectation very clearly through the hiring process and judging by the people’s answers, how they will cope with that sort of environment, because they are by very nature messy. And I think being okay with hiring a bit ahead of where you are. I think sometimes we worry, okay, if we bring in someone a little bit more capable, perhaps it will cost a little bit more. So it’s being okay with that and or will they get bored? But the reality is, and I know this is an old book now, but it’s still very relevant today. The Jim Collins good to great. If you hire your A players, they will make it work for you. And that’s a paraphrase. That’s not exactly his quote. But you know, just if you hire a bit ahead, it will pay back in spades down the track for you.
[00:13:49] Nicole Goodman: Yeah, absolutely. One of the other things we talk about a lot is culture being set from the top. Can you talk a bit about how important manager capability is, especially when you get first time leaders trying to set the tone?
[00:14:05] Ilona Charles: Yeah. Look, I think this is one of the biggest challenges, I think for startups. And we still see this today. So people being put into managerial people, leadership roles because they’ve got great technical skills. So they’re absolutely shooting the lights out. They’re your best performers. They get moved into the leadership role. No one’s taught them ever how to be a leader. They’ve not had any development. Once again, you know, they’re just going on what they think they should be doing. And I’ve seen this even with quite large growth organizations, you know, so they’ve now got 50 or 100 people, you know, so they’ve grown and there’s been no investment in the leadership. Just could be some short online courses, could be anything. But just because they do, the managers really set the expectations. They inform the rest of the teams how to behave. They’re not going to get that from a policy. So I can’t say more strongly how critical it is the manager capability. And even if it’s just putting someone else who has been a leader in the organization before, just some informal buddying or mentoring or coaching, it doesn’t all have to be expensive paid external leadership courses. You know, some of the just getting the basics right. How do you set expectations? How do we have a performance conversation? All of those things can make such a massive difference and so often still underinvested, if at all. It’s almost like sink or swim approach.
[00:15:26] Nicole Goodman: Yeah, there’s a lot of talk about flexibility and what we used to term as work life balance. And a lot of companies do talk about flexibility, but they don’t design for it. What is intentional flexibility actually look like?
[00:15:42] Ilona Charles: Yeah, I think it’s a really good point. In fact, a lot of companies, I don’t think design for it at all. But the starting point is agreeing either at an individual level or at a team level, what the core hours or what the shared hours are going to be that you need to work together. You know, often startups are sort of tech oriented. They’re not all obviously tech companies, but those sort of organizations work in a very agile way. There’s times where they need to come together as part of the methodology stand ups and meet up, you know, all sorts of things. So I think being clear about when you need to come together, when you can work individually, when you need to collaborate, and that might be done team by team or at an individual level. So I think being honest and upfront around what the after hours expectations are, instead of leaving people guessing, that’s when you get a real mismatch of expectation and then making the flexibility work the business as well, not seeing it as a negative thing. Because if you start burning everyone out because you’re making them work ridiculous hours and they’re not getting any downtime after hours either, that can’t be good for them or the organization. So I think at the end, it’s around clarity, being really intentional about agreeing what those hours are and what flexibility is, and having that written down so that everyone’s clear and on the same page.
[00:17:00] Nicole Goodman: Ilona, as we wrap up, if we think about a business that starts scaling quickly, what systems or structures need to be in place to avoid the chaos that can come along with that?
[00:17:13] Ilona Charles: Mhm. And there can be a lot of chaos. So I think in terms of systems and structures, yeah, I think role clarity would be number one for me. So anyone you’re bringing in is very clear about the expectations, what their job involves, who they need to work with and when. Wherever I’ve seen, even in large organizations where behaviors start to go a little bit off, it’s often because there’s not role clarity and people are either falling over each other or there’s gaps in the work and no one knows who’s doing that work. I think simple ways of working, you know, clearly stated, as I’ve said before, just clearly stating what flexibility is, what flexibility isn’t. So everyone understands. And look, we, you know, I see a lot of startups getting policies into place. They see that as sort of the first thing they need to do from an HR point of view. What I would say is keep them simple. They don’t need to be overengineered. A policy statement needs to be almost your sort of cultural guide for the organization, and then the procedures need can be kept quite simple.
[00:18:10] Ilona Charles: And start with the compliance one. Start with the ones that you don’t want to break the law. And then there’s other ones I think that are equally important around setting the tone for behaviours, your code of conduct, you know, what’s acceptable, what’s not acceptable from a behavioural context as well. Often that one gets left a bit later. I’d be trying to set those expectations up front. Setting goals doesn’t have to be a complex performance management framework, you know, to use corporate jargon, but just being clear about what’s important to the organisation, what are the performance things we’re going after? What does that mean for the individual? And being able to give feedback. As we know, everyone still avoids giving feedback and it’s so critical. And just regular check ins, you know, not waiting for some six monthly or annual process, checking in with your team so that compliance and other sort of feedback mechanisms don’t become a chore. They just become part of how you do business every day. They’re my top tips for trying to get through the messiness of startup land. So hopefully they’re helpful.
[00:19:09] Host – Grace Jennings-Edquist: That was Ilona Charles, CEO and founder of Shilo. Thanks for joining us for this week’s episode. Follow Business Essentials Podcast across social media and head to www.BusinessEssentialsPodcast.au for more. Business Essentials is a SoundCartel podcast. Producers are Nick Schildberger, Nicole Goodman and myself. Technical production is by Pete Letts. I’m Grace Jennings-Edquist thanks for listening. We’ll bring you more business essentials next week.
