18 October 2018
Small business needs to embrace digital
Australia’s capacity to remain competitive in the digital economy is contingent on our ability to harness the value of data. We advocate digitalisation for small to medium enterprises (SMEs) and provides policy advice to government on how to encourage SME’s to get online.
Digital connectivity is moving from a ‘nice to have’ to a ‘need to have’. The latest Xero research shows micro-businesses - 0 to 4 employees - predominantly use IT for accounting. However, marketing (44%), business planning (42%) and stock control (23%) have lower usage rates, which means these digitised businesses are not turning their data into a competitive advantage.
ANZ research reveals digitally enabled businesses save an average of around 10 hours a week and subsequently increase annual revenue by almost a third.
Xero research shows that mature companies connected to broadband for a significant amount of time were one-third more likely to have more employees and two-thirds more likely to have a higher revenue; it is growing their businesses and their employment. However, two-thirds of SMEs are not connected to high speed broadband (ABS 2015-16), and the majority of these are micro-businesses.
The impediments to digital adoption include cost, not knowing where to start, fear of technology, finding the time and understanding the benefits. Scottish Pacific research indicated most business owners are focussed on the day-to-day operations and their ability to manage cash flow, rather than maximising the use of data in their businesses.
Xero research reports businesses that use apps for finance, marketing, human resources, inventory/ordering and data management were more likely to grow. For example, a point of sale app can achieve increased revenue from better marketing, stock selection and inventory management.
The messages from these statistics is important. IT suppliers need to be part of the solution. They need to understand the different resources available for medium, small and micro businesses, and provide different packages and support that align with the needs and skills of business owners.
Trusted advisers such as accountants, BAS agents and bookkeepers should expand their services to include developing growth plans for their customers, such as identifying appropriate apps, advice on e-invoicing and performing an overall digital health check.
If SMEs can overcome the hurdles, the benefits of being able to extract useful business insights and making decisions to transform the business are substantial.