Digitisation key for weathering another SME perfect storm

digital evolution, tech stack

The recent 5.2 per cent rise to the national minimum wage is yet another blow for worn-out businesses, as the cost of living continues to put pressure on small-business owners in an already-difficult trading environment.

We know small businesses are reeling from the latest announcement, which follows the RBA’s decision to lift the cash rate and the big four passing on the interest rate hikes, combined with challenges such as surging power bills, the cost of fuel, workforce shortages and ongoing supply chain issues to name a few. All this off the back of devastating fires, the pandemic and some of the worst flooding the country has seen – we are experiencing a perfect storm for small business.

There is no doubt the rising cost of living and inflationary pressures will have an obvious influence on household spending. This in turn will cause many small businesses to lose out in sales, negatively impacting the cashflow they rely on to run their operation or to pay down loans, in turn leading to costs being passed on to customers.

Businesses to take action

In the short term it seems prices will continue to rise as businesses need ways to cover these environmental complications. Small businesses need to take action now and have two options – to run lean or commit to growth, and both require great visibility of business performance.

Running lean means reducing costs to improve cashflow and investing your money to outpace inflation. Aiming for growth means revisiting your pricing strategy, increasing your marketing, and investing in technology to improve performance.

Steps for small businesses

Over the last few years we have seen the value that digital adoption, expert advice and government support provides for small businesses to enable them to weather the current storm.

Digital adoption

We know small businesses that utilise digital tools and leverage online sales using payment, delivery, social, and productivity tools are less likely to experience economic hardships and be better prepared to weather financial strains.

One of the first things SMEs can do is get a digital system in place, such as tax and accounting software, such as Quickbooks, in order to streamline processes, give their business the edge and get back more time (and relief).

Building out digital capabilities and making use of software and digital tools will provide business owners with better oversight of their finances, increase speed in getting paid and ensure items like tax deductions are maximised. It also means businesses are less likely to make errors or omissions when it comes to tracking cashflow or forecasting.

Expert advice

As turbulence continues for many businesses, seeking out sound advice from an accountant or bookkeeper is a great way to ensure they are not just making the right financial decisions for their business, but accessing any government grants and assistance that we know can be tough to navigate.

SMEs often think they’re not big enough to warrant connecting with an advisor, or worry about the cost. But what we now know is that working closely with a professional advisor will help take away uncertainty and stress during a stressful time.

Government digital investment

Anything that increases the cost of doing business is going to hurt. We call on the government to maintain a relentless focus on this crucial shift to digital for SMBs.

SMEs’ success also depends on the governments’ ability to keep pace with and support digital innovation in small business operations through measures such as the bi-partisan supported Technology Investment Boost, providing a 120 per cent rebate to help small businesses with digitisation. Opening up access to banking information through the Consumer Data Right, for example, will also help Australian SMEs to access affordable, reliable funding.

Let’s ensure we get behind our businesses and keep trading with them.