Australian small businesses failed spectacularly to capitalise on the disruption of the COVID-19 pandemic, investing far less in technology-led business reforms than similar companies in ten other Asia-Pacific countries, according to new figures from CPA Australia suggesting local businesses failed to move out of the “digital dark ages” last year.
Australian small businesses, the Asia-Pacific Small Business Survey of 4,193 businesses found, were the least likely to have: begun or increased online sales during the pandemic; used social media for their businesses; invested in technology; profited from their investment in technology; or reviewed their cyber security in past six months.
The 507 surveyed Australian small businesses were also the second least likely to earn revenue from online sales, and third least likely to offer customers a choice of digital payment technologies.
The “disappointing” results were an indictment of the lack of business innovation during the pandemic, CPA Australia CEO Andrew Hunter said in launching the results.
Over its 12-year history, the survey had consistently shown that “growing businesses are more likely to use new technologies, e-commerce and social media,” Hunter said, adding that “these are areas in which Australian small businesses performed poorly.”
Fully 36.1 per cent of Australian small businesses didn’t make any “major change” in their business during 2020 – exacerbating an indifference to technology-driven change that had left their outlook for 2021 well behind that of similar regional companies.
Only 41.4 per cent of Australian businesses said they were expecting to grow during 2021 – well below the regional average of 60.8 per cent, with small businesses in India, the Philippines, Vietnam, and Indonesia reporting the strongest expectations.
Hong Kong, Australia, and Singapore reported the largest business shrinkage during 2020, with just 13 per cent of Australian companies saying they would add employees this year – well behind the regional average of 35 per cent.
And just 6.7 per cent of Australian small businesses said they would introduce a unique product, process or service during 2021 – one-quarter of the 23 per cent average across other regional markets.
Although experts have long said that Australia’s economic recovery would be tied to business reinvention, technology investment and science and technology innovation – with the government even recommitting to R&D and stumping up funds to help businesses extend into overseas markets – the latest CPA survey results suggest that most small businesses have yet to get the memo.
Change, without change
A recent FIS Global report that found Australian companies embraced digital payments rapidly last year – yet embracing digital payments for existing products and services is a far cry from embracing digital transformation to launch innovative new products and services.
Rich pipelines were seen as key to business recovery – named by 58.9 per cent of respondents expecting strong growth this year, but just 6.8 per cent of those expecting to stay the same or shrink.
Fully two-thirds of Asian businesses said they were deriving at least 10 per cent of their revenue from online sales, compared with just 31.6 per cent of Australian small businesses and 25.7 per cent of New Zealand companies.
Youth was correlated with business innovation, with the survey analysis noting that small businesses in Asia “have typically been established for less time and are run by someone who is younger…. These businesses are much more likely to be undertaking activities associated with growth, including leveraging technologies, innovating and creating jobs.”
Policymakers in Australia and New Zealand should, therefore, target younger people with campaigns to help them emulate that success by starting their own businesses or buy existing businesses.
“Ad hoc financial support for digital transformation isn’t sufficient,” Hunter warned, echoing the CPA Australia Budget submission in calling for “a significant commitment of public funding to help Australian small businesses transform.”
“This digital divide will make Australia’s road to economic recovery longer and tougher than it needs to be. If Australian small businesses don’t transform, sales will go to more innovative competitors overseas.”