How measures in the budget will help small businesses bridge the digital skills gap

It’s no secret small businesses are the lifeblood of the Australian economy, and many struggled to stay afloat during the pandemic.

In 2021, Vista’s Small Business Recovery Report found six in 10 (60%) Australian small business owners dipped into savings, 50% cut back on groceries and one in five (18%) borrowed money from a friend or family member to survive.

But with tax deductions for employee training and digital technologies announced in the 2022 federal budget, small business owners will find some relief in the support provided to help make their business resilient and sustainable.

Digital or bust

Consumer behaviour changed during the pandemic — and there is no going back. SMEs now operate in a world where digital is not only essential but the preferred channel of many customers.

However, the Organisation for Economic Co-operation and Development (OECD) report, The Digital Transformation of SMEs, identified the digital skills gap as one of the greatest barriers to SME digital adoption. Size and resource constraints are key reasons stopping SMEs going digital. That lack of digital know-how makes SMEs less productive, sustainable and resilient.

Vista’s research also found one in three (32%) Australian small business owners struggle with marketing, and one in five struggle with IT, website and digital services (18%).

In a spin on the well-known ‘give a person a fish and you feed them for a day’, we need to help small businesses learn to fish in new waters by upskilling in all things digital.

One-off cash injections are stop-gap measures, and not a long term solution. The announced tax deductions help fast track learnings so small businesses can learn how to attract and retain customers in the digital realm.

Government incentives, public-private partnerships key

The OECD says the government has the power to play an important role in reducing the SME digital skills gap in providing tax incentives for SMEs to undertake training, particularly in digital marketing and website management. Stronger links and cooperation between private and public sectors and higher education providers is now needed to facilitate initiatives like business accelerator programs to contribute further.

For example, governments in Latin American countries and the Inter-American Development Bank are co-financing coding boot camps to meet demand from local communities, especially young people and entrepreneurs.

Encouraging emerging entrepreneurs

It’s not only about investing in digital skills. One group that did miss out in the budget was Australia’s budding entrepreneurs. Investment in incentives to encourage emerging entrepreneurs and startups — particularly digitally savvy younger generations — should have also been top of priority list for the the major parties.

Most government pandemic financial aid was aimed at maintaining cashflow to keep afloat and keeping jobs, not incentivising entrepreneurs to create them. COVID-19 was a time for survival. Now is the time to reward innovation. More government incentives for creators would go a long way to rebuilding the aspirational innovation pipeline. The private sector will have an important role to play in incubators and hubs to support this community as well.

Opportunity is born from adversity. The biggest opportunity for Australia’s small businesses is a digital-led recovery. The initiatives outlined in the government’s budget will see the sector recover but now is the time for the private sector to step in to support to see the community thrive.

Marcus Marchant is the CEO of Vista Australia.