As many as 68 per cent of SMEs report that their productivity is being constrained by the current economic environment according to the latest edition of the bi-annual Business Monitor, released by business management platform MYOB.
The report found that SMEs are burdened by external factors such as fuel pricing (41 per cent), cost of utilities (38 per cent) and interest rates (30 per cent), while 27 per cent said that they are affected by price and margin profitability.
Overall, respondents rated themselves a 6.2 out of 10 for productivity.
To address the productivity challenge, 34 per cent believe that the answer lies in improving skills and training programs, followed by government grants to improve skills and training (31 per cent), and government grants to help businesses improve access to and use of technology (29 per cent).
Emma Fawcett, General Manager SME at MYOB, stressed that small businesses will need to focus on productivity as they face a tightened economy in the year to come.
“The nation’s 2.5+ million SMEs have shown resilience throughout the last few years, and with further difficulties anticipated as the economy stabilises it will be important to review their business productivity to ensure they are setting themselves up for security and growth,” Fawcett said.
The research also pointed out other ways businesses can boost their productivity. Already, 21 per cent have digitised more of their operations in the last 12 months and, of those that have, 39 per cent have been more productive as a result. 34 per cent of those who have increased their digitisation say it helped them to work remotely and collaborate.
“Digital capabilities are closely linked to productivity, helping SMEs save time, money and improve accuracy in their business operations, as well as drive economic growth in uncertain times,” Fawcett shared. “Despite the benefits it brings to the bottom line, cost remains a barrier. Only one in ten respondents (11 per cent) are looking to increase their investment in IT systems and processes in the coming year.”
As means to address the economic challenges they are facing SMEs are looking to increase in investments on prices and margins on products and services sold (30 per cent) and the amount they pay employees in their business (24 per cent).
“The investments reflect the environment, with SMEs looking to adjust their margins where they can. Employee numbers will hold steady for most, with 78 per cent not looking to make changes to the number of full-time employees and 72 per cent keeping the same number of part-time or casual employees,” Fawcett said.
The report also noted that SMEs anticipate limited growth in the year ahead. About a quarter of the survey respondents have seen both revenue (22 per cent) and profitability (26 per cent) growth in the last year. Meanwhile 27 per cent expect their business revenue will be up in the next year and 28 per cent expect an increase in profitability. 45 per cent anticipate economic decline in the coming 12 months.
“This challenging period is not yet over for the nation’s SMEs, so any emphasis they can put on driving productivity and boosting their performance will hold them in good stead – as contributors to 99 per cent of the nation’s GDP it will also help build a stronger economic outlook,” Fawcett concluded.
