Australian small businesses grew more slowly than their peers in the Asia Pacific last year, according to CPA Australia’s latest Asia-Pacific Small Business Survey, and their failure to embrace technology is a key reason.
The organisation said the survey highlighted the need for ambitious programs to hasten digital uptake by small businesses, and they should be included in federal election platforms.
The survey showed that more Australian small businesses shrank in 2021 than grew. Only 32.2 per cent of Australian respondents said their business expanded last year, while 35.5 per cent reported it contracted.
In addition, Australian small businesses recorded the lowest rate of revenue growth, at 33.7 per cent and increased employee numbers by only 7.1, compared to the survey average of 28.7 per cent.
CPA Australia’s senior manager business policy, Gavan Ord, said 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,” he said.
“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 shows that part of the answer lies in their inability to participate in the digital economy.”
Mr Ord said there was a positive correlation between digital adoption and business growth. But when it came to Australian small businesses, technology was their weak link.
Two years after the pandemic began, Australian small businesses are significantly less likely to conduct business online than their regional peers, with 44.7 per cent failing to record any revenue from online sales in 2021.
They are also the least likely to offer digital payment options or use social media for business, and CPA Australia said this situation appears unlikely to change any time soon.
Only 5.9 per cent of Australian small businesses expect to innovate in 2022 – the lowest figure in the region. Mr Ord said 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,” he said.
“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.”
Increasing cyber-security focus
CPA Australia is also concerned about the cyber-security implications of the survey’s findings, given the current geopolitical climate. Only 35.3 per cent of Australian small businesses have reviewed their cyber security in the past six months.
Mr Ord said the survey suggests that Australian small businesses underestimate the prevalence of, and are underprepared for, cyber attacks.
“This makes them one of the most vulnerable sectors of our economy, and hence most attractive targets, for cyber attacks,” he said.
“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 ($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.
This is key to becoming a leading digital economy and society by 2030, and to driving Australia’s future prosperity.
“Whichever party forms the government, we want them to ensure Australia’s Digital Economy Strategy reflects the importance of small business and supports them to succeed in the digital economy,” Mr Ord said.