In a few days, Prime Minister Malcom Turnbull will hand down the 2017 Federal budget. There’s no doubt that many small-business owners breathed a sigh of relief at the government’s tax cut savings, which in 2017-18 will reduce the tax rate to 27.5 per cent for businesses with an aggregated turnover of under $25 million. That cut will also be extended to those with an aggregated turnover of less than $50 million in 2018-19.
For Australia’s estimated 800,000 SMEs, this windfall could certainly mean that business owners would be able to afford to re-invest in their business. They could purchase necessary equipment, for example, hire additional staff or even better manage and fund their working capital needs.
Certainly, SMES should consider investing their tax savings wisely in digital technology so that they can stay ahead of the competition. We recently surveyed over 600 Australian companies in the ASX 300+ (Secrets of Success of the ASX300+).
Our findings showed that companies investing in digital technology grew their revenue faster than those that did not and their profitability returns were also greater. There’s no doubt that wise investment in technology helps SMEs work more efficiently, and can even assist in breaking into new markets and saving on costs.
Take Cloud services: not only has access to this technology never been more affordable to the mid-market, but it allows businesses to access their files and spreadsheets anywhere in the world, often in real time, so they can plan and forecast while having access to comparative real time data. The Cloud allows SMES to be nimble and agile, and upgrade easily to more sophisticated services as their needs change. Such services include accounting, enterprise resource planning (ERP) or human capital (human resource) systems.
Similarly, sound investment in communication allows businesses to stay in touch with clients and customer, particularly if they’re on the go, or in remote locations. Voice Over IP (VOIP) systems such as Skype for Business keep everyone connected at an efficient cost, as can video conferencing technology, and portable systems such as laptops and tablets. Many SMEs are also taking advantage of mobile payment technology, particularly if they’re in the hospitality or retail sectors.
Finally, all businesses, large or small, need to consider their security needs, especially as the risks of cybersecurity breaches are on the increase. Smaller companies may not have the budget to employ a swathe of security experts, but they can still invest in effective systems to protect their data and networks.
The KPMG Enterprise Secrets of Success Report* highlights that 15 per cent of the ASX 300+ are showing some financial distress in terms of their working capital position – and debt levels are slowly rising overall across the ASX 300+. Businesses that can take advantage of evolving technology to stay ahead of the game and counter disruption through smart, forward-thinking business practices, can minimise any such impacts and disruptions.
Rob Bazzani, National Managing Partner, KPMG Enterprise
* Enterprise is a division of KPMG focusing on the mid-market, and counsels SMEs on tax, audit and advisory matters
