SMEs recognise they need to grow by improving efficiency and boosting productivity, however many are finding themselves hamstrung by a lack of financial reserves and problems finding sufficient skilled staff.
The issues were highlighted in the 2017 OKI SME Business Efficiency Survey which took the pulse of 3000 Australian SMEs and discovered how conditions have improved during the past year.
Operational efficiency on the rise
The survey found 82 per cent of SMEs feel they are they are currently operating cost effectively. More than half of the SMEs surveyed say they implemented cost saving initiatives during the past 12 months, and a further 21 per cent say they intend to do this during the next year.
This is encouraging news as keeping operational costs under control is important during uncertain economic times. By carefully reviewing each area of their business, SMEs are able to remove over spending without having any detrimental impact on service levels or outputs.
More investment is required
Despite these gains, most SMEs acknowledge that they could further achieve if they had more funds to invest. Investments in workflow management tools, cloud computing resources and mobile devices for staff could further boost their efficiency within a short space of time.
Faced with constrained budgets, SMEs are spending frugally. The survey found that 59 per cent spent less than $5000 on efficiency initiatives during the past year while 85 per cent spent less than $15,000.
As a result, spending tends to focus on smaller items, such as printers, copiers and PCs, with 74 per cent of survey respondents saying they had made investments in general ‘efficient’ IT technology during the year.
As well as hardware, spending also focused on efficiency-boosting areas such as website and app development and the introduction or enhancement of ecommerce and digital marketing capabilities.
Bigger initiatives out of reach
Unfortunately, the tight purse strings mean that larger projects are off the to-do list for the majority of SMEs.
This is frustrating as firms understand, for example, that a targeted big data project could provide them with insights into their customer base that would not previously have been possible.
At the same time, replacing cumbersome manual processes with digital workflows could improve service levels and allow SMEs to increase their market share or efficiently extend operations into new areas.
SMEs also appear to be struggling when it comes to finding new staff. One in four report problems attracting sufficient skilled personnel.
A skilled staff shortage makes it difficult to take advantage of new business opportunities or extend current programs. Some businesses may be forced to increase their wages bill so they can be in a position to lure staff away from competitors or from other sectors of business.
To address what is clearly a long-term issue for SMEs, training and education providers will need to ensure the courses they are offering are carefully aligned with the requirements of Australia’s business sector.
Saving for the future
When it comes to making plans for the future, SMEs appear to be taking a cautious approach. The survey found that 35 per cent are banking any savings gained through efficiency improvements rather than reinvesting the funds into other areas.
While 23 per cent of respondents say they are putting savings into becoming even more efficient, only one in five say they are using the funds to develop additional products and services.
It’s clear SMEs are active and constantly looking for opportunities to grow. This growth could be enhanced if more funding could be found for investment in strategic areas and extra skilled staff could be located.
Antonio Leone, ANZ Marketing Manager, OKI Data Australia