Half a million small businesses still behind the digital wave

digital wave, data mining, AI, digital stimulus, smart business, digital resilience, machine learning

New research indicates that nearly half a million Australian SMEs are either not fully or just barely made the transition into the digital wave and about $10 billion would be needed by the Australian economy, to facilitate their transition.

According to the research by business management platform MYOB, 466,062 SMEs – approximately 20 per cent of the 2.29 million in the sector – do not have access to digital tools that would have helped them in critical areas of their business workflow, such as compliance and supplier management.

On the flip side, among the SMEs using digital tools, 40 per cent of businesses use digital cloud-based software for work in progress (WIP) management, 38 per cent for managing their people, 37 per cent for growth opportunities, such as marketing, and 26 per cent for connecting with their customers on social media.

MYOB also noted that support packages that bridge the digital gap for the one in five SMEs left behind will bring aobut a 1.8 per cent increase in the SME GDP contribution, or a $10.5 billion gain for the Australian economy and that tax system and cloud-based software as a service (SaaS) products serve as the perfect gateway for SME digitalisation.

“Our new research tells us 24 per cent of SMEs are worried new technology is too expensive and a further 24 per cent don’t have the time to set it up,” MYOB’s Chief Employee Experience Officer, Helen Lea, said. “Of the businesses who digitised during the pandemic, 39 per cent found themselves to be more productive and 34 per cent were more profitable. Eighty-five per cent said they were able to keep their business running thanks to digital tools.

“For the one in five SMEs at risk of being left behind, a tax incentive that is easy for businesses to engage with, that is pointed out to them by their accounting and bookkeeping advisors with whom they speak regularly, will remove a significant hurdle to digital adaptation,” Lea added. “Our research supports this: 27 per cent of respondents shared that an incentive, such as a tax deduction, would help them get started.”

MYOB pointed out that the SaaS model software is custom built for the SME way of working and that cloud-based SaaS products allow businesses to work however and wherever they like, with the subscription model allowing a business to grow their software use with their operations.

“We are recommending to Government that they consider a refundable rebate on new SaaS subscriptions for SMEs with 0-199 employees, with a tiered incentive structure to promote end-to-end digitisation of businesses,” Lea said. “This change alone we predict is worth $10.5bn to our economy in the short term. If you combine this with the annual saving of $23.5bn afforded by a mandatory introduction of B2B e-invoicing, adoption of which could also be motivated by this SaaS incentive, it’s a pretty compelling case for putting our trust in small businesses as Australia’s economy recovers and grows,” Lea concluded.