Tough competition is the number one barrier for growth for Australian SMEs. This is according to the inaugural State of Small Business Global Report by cloud-based commerce platform TradeGecko in collaboration with Golfdale Consulting. In contrast, US SMEs cited lack of time as the major factor stifling growth.
Despite this, the SME sector reported being in good health. Globally more than 80 per cent of SMEs surveyed reported maintaining or growing revenue in 2018 despite stiff competition against global rivals.
SMEs are the lifeblood of the global economy, making up over 95 per cent of all firms and 60-70 per cent of total employment. The report polled 573 commerce businesses from 24 countries around the world, including 129 from Australia, to lift the lid on the success factors for small and medium-sized commerce businesses. In total, the small businesses surveyed worldwide employed some 107,000 people and sold AU$2.6 billion in products last year.
The report shows that agile small businesses are highly digitally savvy; leveraging social media and technology to level the playing field with bigger competitors when it comes to marketing their products. Globally, emerging SMEs (those with less than US$1 million in sales), relied most on word of mouth to generate buzz about their products with Facebook (74 per cent) and Instagram (43 per cent) being the dominant social media platforms. Australian SMEs also tended to favour Instagram (42 per cent) and YouTube (31 per cent) more than their US counterparts.
As SMEs grow, they use a broader channel mix including bricks-and-mortar, in-person sales, wholesalers and distributors. Firms over US$5 million rely more on channels such as Twitter (37 per cent), YouTube (37 per cent) and LinkedIn (36 per cent) for promotion campaigns.
“Small businesses are punching above their weight when it comes to competing in the global market against large firms with big teams and big budgets. That is certainly reflected in the findings for Australia. Social media and digital platforms are enabling SMEs to reach new audiences and to scale but the competition is tough. Technology can help to level the playing field,” said Cameron Priest, Co-Founder and CEO of TradeGecko.
Businesses under US$1 million spend over 90 hours a month on average on critical backend functions such as order and inventory management. Product sourcing is the most time-consuming activity for Australian SMEs, with operators spending on average 53.6 hours a month versus their American counterparts who spend on average 35.3 hours a month. Australian SMEs are more tech-savvy than their American counterparts. While nearly a quarter of US SMEs are using pen and paper to manage their inventories only 11 per cent of Australians were doing the same and 22 per cent were using technology in their inventory and order management processes.
In general, the study showed that while competition is the universal challenge for founders across the board, the day-to-day pressures of running a business take their toll. Insufficient time (27 per cent), hiring the right staff (26 per cent) and operational issues (21 per cent) were among the biggest factors cited by founders holding their businesses back from growing more quickly. 51 per cent of Australian SMEs reported concerns about lost time and productivity, while owners said they would like to spend more time on marketing, sales and product development.
“Being a business founder means being a ‘Jack and Jill of all trades’ but as your business succeeds you can leverage technology not just to sell product but to build scalable operational systems that will support future growth,” added Priest. “Flexible online tools give small and medium-sized businesses the superpowers they need to compete with larger rivals and ultimately free up business owners to do what they do best, build amazing businesses.”