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Small business is a weak link in Australia’s digital economy

CPA Australia publishes results of new Asia-Pacific Small Business Survey 2021-22

Australian small businesses achieved the lowest rate of growth in the Asia-Pacific in 2021, according  to CPA Australia’s Asia-Pacific Small Business Survey, published today.

The organisation says the results point to the need for governments at all levels to do more to support Australia’s digital  future. CPA Australia is urging the major political parties to commit to more ambitious programs to  hasten small business digital transformation as part of their federal election promises. 

Our survey shows that more Australian small businesses shrank in 2021 than grew. Only 32.2 per cent of Australian respondents responded that their business grew last year(survey average 47.3 per  cent), while 35.5 per cent reported that they shrank. Not only did Australian small businesses record the lowest rate of revenue growth, at 33.7 per cent (survey average 50.2 per cent), only 7.1 per cent  increased employee numbers (survey average 28.7 per cent). 

Senior Manager Business Policy, Gavan Ord, says the below par results are a wake-up call. “Small  businesses are incredibly important to Australia’s economy. They make up around 98 per cent of all  Australian businesses, employ over 40 per cent of the domestic workforce and contribute the  equivalent of one-third of our country’s GDP. 

“I take my hat off to small businesses in Indonesia, the Philippines and India, which led the region by  growth. Those markets have also had a tough ride from COVID-19 and yet their small business  sectors have proven remarkably resilient. This begs the question, ‘Why are small businesses in  Australia being out-performed by their regional peers?’ 

“Our survey showsthat part of the answer lies in theirinability to participate in the digital economy. There is positive correlation between digital adoption and business growth. But when it comes to  Australian small businesses, technology is their weak link.” 

Two years after the pandemic began, Australian small businesses are significantly less likely to  conduct business online than their regional peers. 44.7 per cent of Australian small businesses did  not earn any revenue from online sales in 2021 (survey average 19 per cent). They are also the most  likely not to offer digital payment options (39.4 per cent; compared to only 0.1 per cent of Chinese  small businesses)or use social media for business (36.7 per cent; survey average 17.2 per cent). 

This situation appears unlikely to change any time soon. Australian small businesses were the least  likely to make any investment in technology in 2021 (35.1 per cent did not make any investment in  technology compared to only four per cent of small businesses from India). Only 5.9 per cent per  cent of Australian small businesses expect to innovate in 2022 (survey average 27 per cent). 

Ord says the results are evidence that Australia’s small business sector needs more help. “These are  clear signs that current government digital support and incentive programs aren’t delivering for  enough small businesses. The economic and social benefits of the shift to a digital economy will  never be fully realised while significant numbers of small businesses are left on the sidelines. It’s in  the national interest for governments to facilitate their inclusion and participation.”

CPA Australia is also concerned about the cyber security implications of the survey’s findings, given the current geo-political climate. Only 35.3 per cent of Australian small businesses have reviewed  their cyber security in the past six months (survey average 46.7 per cent).  

“Cyber security is a national security issue. According to the government’s Australian Cyber Security  Centre, Russia’s invasion of the Ukraine has increased the likelihood of cyberattacks on Australian  businesses. Our survey suggests that Australian small businesses under-estimate the prevalence of,  and are under-prepared for, cyberattacks. This makes themone of the most vulnerable sectors of  our economy, and hence most attractive targets, for cyberattacks.” 

There are lots of ways to help small businesses improve their digital capability. However, they  typically require a substantial investment, which overseas governments have so far proven more  willing to make. For example, Singapore’s Productivity Solutions Grant (one of many in that country)  includes S$600 million (A$605 million) to help small to medium-sized enterprises to digitalise and  automate their processes. 

With a federal election looming, CPA Australia is calling on the major political parties to make a  meaningful commitment to small business digital transformation. We think this is a key to Australia  becoming a leading digital economy and society by 2030, and to driving Australia’s future prosperity. 

“Whichever party forms government, we want them to ensure Australia’s Digital Economy Strategy  reflectsthe importance of small business and supportsthem to succeed in the digital economy.” 

One of the predictors of small business success is access to professional advice. 96.1 per cent of the  high growth businesses we surveyed sought professional advice in 2021. However, Australian small  businesses were the least likely to seek professional advice. CPA Australia recommends giving small  businesses financial incentives to seek professional advice, including about digital transformation.  

Secondary editor and executive officer at Tech Business News. Contracting as an IT support engineer for 20 years Matthew has a passion for sharing his knowledge of the technology industry. He's also an advocate for global cyber security matters.

Matthew Giannelis
Matthew Giannelis
Secondary editor and executive officer at Tech Business News. Contracting as an IT support engineer for 20 years Matthew has a passion for sharing his knowledge of the technology industry. He's also an advocate for global cyber security matters.

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