Major parties urged to make digital a priority, as Aussie small businesses fall behind

Australian small businesses are significantly less likely to be earning revenue online or offering digital payment options, compared to their Asia-Pacific counterparts, according to research from CPA Australia released today. 

The findings have prompted the peak accounting body to once again urge the nation’s leaders to help more small businesses move online ahead of next week’s budget and the May election. 

CPA Australia’s latest Asia-Pacific Small Business Survey interviewed 4252 small businesses in Australia, New Zealand, mainland China, Hong Kong, India, Malaysia, the Philippines, Singapore, Taiwan and Vietnam during November and December 2021. It found a strong correlation between digital capabilities among small businesses and their ability to grow. 

But despite rapid growth in some online industries during the pandemic, particularly e-commerce, there are large sections of the small business community that are not using or investing in digital tools. 

According to the survey, 44.7% of the 510 Australian small businesses surveyed did not earn any revenue from online sales in 2021. This compares to a survey average of 19%. 

Similarly, fewer Australian small businesses are not yet offering digital payment options to customers. Close to 40% of the Australian businesses surveyed (39.4%) said they do not offer digital payments, compared to 0.1% of Chinese small businesses. 

When it comes to social media, 36.7% of Australian small businesses said they do not use it, compared to an average of 17.2% across all survey respondents. 

Australian small businesses were also found to be the least likely to have invested in technology in 2021, with 35.1% reporting that they did not make any investments last year. 

Digital affects growth

The survey also showed Australian small businesses recorded the lowest rate of growth in the Asia-Pacific region in 2021, and more businesses shrank throughout the year than grew. 

The survey found 32.2% of Australian small businesses grew in 2021, compared to a survey average of 47.3%, and 35.5% that said their business shrank last year. 

Australian small businesses recorded a lower rate of revenue growth (33.7% compared to survey average of 50.2%) and employee growth (7.1% compared to survey average of 28.7%).

While many local businesses, especially those located in the eastern states, were of course subject to COVID-19 restrictions and lockdowns throughout the year, CPA Australia’s senior manager of business policy Gavan Ord says small businesses in neighbouring countries have also been badly affected by the pandemic. 

“I take my hat off to small businesses in Indonesia, the Philippines and India, which led the region by growth,” said Ord. 

“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?’”

CPA Australia says the major parties must do more to speed up the digital transformation of Australia’s small business sector and include “ambitious programs” to do so in their election promises. 

“These are clear signs that current government digital support and incentive programs arn’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.”

At the same time, Ord says there are serious cyber security implications for local small businesses, particularly in light of the heightened risks of cyber attacks stemming from Russia’s invasion of Ukraine. 

CPA Australia has previously called the federal government to follow Singapore’s example and provide significantly more funding for digital grants for SMEs. Another proposal for the government to provide financial incentives for businesses to seek professional advice could also help, the body says.