Australian SMEs can tap into almost $50 billion in output over the decade by making better use of existing technology, according to a recent report.
The Pricewaterhouse Coopers analysis, commissioned by Google, shows that small businesses can unlock an additional $49.2 billion of private sector output.
PwC economics partner Jeremy Thorpe said despite Australia’s reputation as a nation of early adopters, our small businesses (of less than 200 employees) are not fully embracing the transformational benefits of mobile and internet technology.
“We’re advocating small business to take advantage of the tools that are already available such as mobile-friendly websites and cloud-based services,” he said.
The potential boost for retail, health and hospitality sectors are:
- $28.4 billion current private sector output (2014, base year)
- $2.3 billion potential boost to economy (over 10 years)
- 76,000 small businesses
Health Care and Social Assistance
- $35.4 billion current private sector output
- $4.3 billion potential boost to economy
- 52,400 small businesses
Accommodation and Food Services
- $15.4 billion current private sector output
- $1.5 billion potential boost to economy
- 60,000 small businesses
The report also shows:
- 53% of the potential economic benefit of the internet is to be had outside Australia’s inner metropolitan areas.
- Northern Territory businesses stand to gain the most. On average, each NT small business stands to create over $90,000 of additional economic value by making the most of the net. Followed by Western Australia (over $85,000) and Queensland ($75,000).
- SMEs in the agricultural, forestry and fishing sector could create 17% more value by making better use of technology.
Source: Pricewaterhouse Coopers
Looking at the same figure in geographic terms, nationally every federal electorate would contribute almost $327.7 million of economic output over 10 years (or about $33 million per year). This would be roughly the same as a significant capital project like a major roadway or a hospital update.
What can SMEs do to achieve these gains?
- Know your customers and competition: About 46% of SMEs use the internet to monitor the market or competitors, and 54% report a positive impact from social media via good customer feedback, increased sales and better networking.
- Lower the cost and risks of trying new things: Businesses like Pozzible, Indiegogo, Kickstarter, and RocketHub make innovation easier by connecting people who pool money, technical expertise, and other resources to support projects and launch business ventures.
- Save time and money on admin: Use cloud-based bookkeeping and accounting services such as Xero and MYOB.
- Increase annual revenue: SMEs that have high-levels of digital engagement (e.g. use search engine optimisation and marketing and multiple digital technologies) have better business outcomes compared to those with lower engagement, with some studies suggesting a 20% revenue increase.
What can SMEs do to unlock their potential?
- Find the right small businesses: Newer business (less than two years) may be more willing to adopt new technology to accommodate customer demand.
- Choose the right message: Value propositions about new technology should be framed appropriately. Eg: Messages should include costs relating to training, maintenance and, if applicable, compliance.
- Get the right advice: Industry bodies and networks can be the most effective at communicating digital technology awareness.
- Reduce regulatory barriers: Commercial solutions are preferred and if regulations are necessary, then they should be proportionate, flexible and balanced.
Head of Small Business Marketing, Google Australia, Richard Flanagan, said: “From finding new customers to saving money, technology helps virtually any small business grow.
“Small business is too big a part of our economy not to be cranking. The great news is that there is nearly $50 billion of economic value that Aussie small businesses can tap into, simply by making better use of existing technologies.”