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With big business acquisitions and foreign takeovers of Australian small and medium sized businesses being widely reported in the media, you’d be forgiven for thinking that the Australian SMB market is declining, or dying. It’s not. It’s actually growing. An adequate technology infrastructure is a key factor in driving SMB business growth and success.
The last decade has seen growth in the number of SMBs contributing to the Australian economy, both in terms of employment and revenue.
The growth in contribution is countered by increased competition and a squeeze on profit margins for small to medium sized businesses. It’s still the case that 80% of all businesses close or fail in within five years of being established in this country. With increased competition and ongoing cash-flow problems, it’s not surprising that business confidence among SMBs in Australia is not as high as that of our neighbours across the ditch in New Zealand.
There is a key driver and indicator for success among Australian SMBs, in the use of digital technologies. The Australian Communication and Media Authority’s 2014 report on SMEs in the Digital Economy has noted that small business attitudes towards and use of emerging technologies plays a critical role in the development of the digital economy. Being both consumers and facilitators of online services, SMBs can be considered a bellwether for technological sophistication of the entire economy.
It also appears that more sophisticated uses of technology (including use of social media to engage with customers, technology-mediated collaboration, unified communication systems and cloud-based data storage) align with profitability among SMBs. Deloitte has gone so far as to say that highly engaged small businesses have double the potential growth potential and double the profit per employee when compared with businesses that have low technically-mediated engagement.
It’s not as if business owners are unaware that they need to invest in emergent technology, either. In research conducted by Lonergan for PayPal, 60% of small business owners acknowledged that their lack of digital literacy was preventing their business from running efficiently. Nearly 80% said there was a need for more guidance on tools and strategies.
It’s odd then, that so few Australian SMBs are adopting technology tools to help them improve productivity and economic performance. According to recent MYOB stats, only 16% of Australian SMBs have a website and a social media site for their business, and only 32% use cloud computing.
Of course there are reasons - or at least excuses - for this lagged approach to technology adoption. In my experience of dealing with small and medium businesses, there is often a perception that cloud based data storage, for instance, is more expensive and risky than existing internal server-based file management systems. The reality, of course, is that cloud-based systems are more secure, and almost certainly cheaper than the ongoing maintenance costs of an internal server system.
In terms of unified systems, SMBs that resist adoption will frequently cite cost again, as well as comfort with existing software and hardware systems as their rationale. Nevertheless, competing software products that don’t share data efficiently can produce a massive time sink for businesses. I’ve consulted to organisations where timesheets systems were not linked to customer relationship management, billing, calendars or leave management systems, producing an almighty mess of reconciliation at the end of any work period. The cost of reconciliation, as well as the cost of repeated input of data across software platforms usually far exceeds the cost of a unified alternative.
And when it comes to facilitated collaboration or social media use, businesses will usually cite a lack of time or resources to invest in these tools. But considering the performance boost for adoption, it seems quixotic that these businesses will invest in what they see as personalised business practices, without having the tools to improve that service. And when cash-flow and increased competition are the main drivers for business wariness, you’d think that investment in these tools was a no-brainer.
So while the Australian SMB market is not dying, it does risk stagnation. A solution is at hand, if only business owners reach out and take it.
Download the Six Keys to Small Business ebook to learn how with the right technology you can grow faster and more efficiently than are today.
Joanne Jacobs is an award-winning digital strategist and company director. She advises firms on executive management skills, digital change management and social data analysis. She is on the Board of Code Club Australia, and she is a Director of word of mouth marketing firm, 1000heads, where she formerly served as Chief Operating Officer. Joanne has previously worked in London where she ran a social media production house, and she was a consultant in social networking technologies, and was a professional speaker, business coach, trainer and strategist for digital marketing practices. Joanne has a long history in academia, lecturing extensively in strategic use of information technology and strategic internet marketing. She was co-editor with Axel Bruns of the book, Uses of Blogs (2006). http://joannejacobs.net/
