A nationwide survey by cloud-accounting provider Reckon reveals that one in three small businesses find it tough to set up shop in Australia, citing the lack of government support and technology infrastructure as key barriers to success.
The survey of over 1150 small-business owners found that almost half (45 per cent) of respondents have had to cease operations because their previous venture failed.
Amazon’s arrival has emerged as a major cause for concern, with more than 70 per cent saying the government isn’t doing enough to protect them from the eCommerce behemoth.
In addition, over half (54 per cent) are worried about being left behind in the digital economy race due to slow internet speeds, while 83 per cent are also not confident in the government’s ability to deliver the National Broadband Network (NBN) within the next two years as promised.
The top three solutions respondents want from the government are better tax offsets (53 per cent); improved internet connectivity to support them in building an omni-channel presence (32 per cent); and more start-up incentives (26 per cent).
“The Australian small-business landscape has undergone massive changes in the past few years alone, the most major being the shift from traditional bricks-and-mortars to online. With that, local businesses now find themselves having to compete in the global marketplace,” said Sam Allert, Managing Director ANZ at Reckon.
“For small businesses to survive and thrive online in the presence of global players like Amazon, not only do they require a more robust and reliable technology infrastructure, they need to become more digital savvy.
“What we need to be doing as a nation is enhance our overall technology capabilities. To achieve this, there needs to be a concerted effort between the government, private sector and small businesses,” Allert added.
“In addition to better incentives and greater investments from the government to build up our infrastructure, technology providers can also play a part by educating, upskilling and providing small-business owners with the digital know-how to innovate and ultimately, effectively compete against global brands.”
Top small-business challenges for 2018
In terms of the outlook , 38 per cent of respondents say declining customer demand is the most likely to negatively impact their profitability in 2018. Worryingly, one in three (33 per cent) indicate that government policies will be the factor that affects them the most, whilst over one in four (27 per cent) agree that cashflow will continue to be an ongoing issue, fuelled by the lack of late payments legislation.
To alleviate cashflow issues, 30 per cent of small businesses currently operate on a loan, with the majority of respondents turning to traditional banks as the first port of call, followed by their family (20 per cent). This is despite the challenges that come with gaining access to finance from banks, as they tend to favour applicants with equity in physical property and a good track record – both of which small businesses often struggle to prove.
“The majority of Australian small businesses have a general payment term of 30 days for good reason – without a healthy cashflow cycle, business growth can be severely restricted,” Allert said.
“Cashflow is one of the highest ranked pain point that keeps small businesses up at night, and it is no secret that they still struggle to get their loans approved by traditional lending sources. We have seen a rise in demand for online lenders in recent years, with small businesses increasingly turning to these non-traditional alternatives for loans. While banks can take weeks to approve funds and require a full business forecast, a non-bank lender can provide working capital quickly without the hassle. This is something that really appeals to small-business owners and sole traders, who do not have the luxury of time to spend away from their day-to-day operations creating business plans.”