Small businesses with an annual turnover of less than $100,000 were more likely to prioritise a review of their business technology in the new financial year than operators with a higher turnover.
Close to half of Australian small businesses are prioritising investment in machinery, equipment and technology in the new financial year, according to Commonwealth Bank research released today.
The research, which surveyed Australian small businesses with an annual turnover of less than $1 million before the end of financial year, found 41% planned to reinvest in their business in the 2017 financial year.
Clive van Horen, Executive General Manager Small Business, Commonwealth Bank, said, ‘the overwhelming majority of all Australia’s businesses are small operators so it’s pleasing to know they are looking to reinvest back in their business.
‘We typically see a spike in the number of our Business Transaction Accounts opened in June and July, as small businesses gear-up for the new financial year. The research indicates this trend may continue this year.’
The research also found almost half of small business owners felt ‘confident’ and ‘calm’ as the current financial year draws to an end, with ‘reviewing the performance of their business’ their top priority – 50%.
Cashflow management is a major pain point for small business. Almost one-third of small business owners currently manage cashflow issues by dipping into personal funds, the research found. A third of businesses said they do not use any form of credit facility for business investment, working capital or cashflow.
‘Small business operators are typically very passionate about their product or service, which sometimes means their day-to-day banking needs don’t get enough attention,’ said Mr van Horen.
‘Given the research indicates small businesses are looking to ramp up expenditure in equipment and technology in the new financial year, there is a big opportunity to realise the potential of their business through a range of asset financing options, which can significantly alleviate cashflow issues.’
Digitisation, technology and innovation take a back seat
Despite the increasing role of technology in business, just one in five small business operators surveyed said they would prioritise a review of their technology. Retail and hospitality businesses were the most likely to prioritise the evaluation of business technology at the close of FY16, closely followed by those in the professional and business services sector.
Interestingly small businesses with an annual turnover of less than $100,000 were more likely to prioritise a review of their business technology in the new financial year than operators with a higher turnover.
‘Small businesses understand the difference technology can make to their lives and the customer experience, but finding the time to research and invest can be difficult. Today’s challenging marketplace calls for innovation, which requires leveraging digital technologies to maintain a competitive advantage,’ said Mr van Horen.
Small business future not certain
The research also found small businesses are not adequately future-proofed. While the majority of small businesses – 57% – expect their operations to continue on after they exit the business; two-thirds currently lack a succession plan preparing them to do so.
Sole traders are least likely to have a plan – 74%, and are also most likely to expect the business to close upon their exit – 60%.
Small business EOFY tips
Commonwealth Bank Small Business also asked small businesses to provide their top tips to cope with the end of financial year. Overwhelmingly, the most popular tips were: