Going digital: What do small businesses in Australia struggle with?

TECHNOLOGY drives businesses and those that fail to digitize are already beginning to hemorrhage customers.

While mid- and large-enterprises struggle to climb the digital maturity curve, it seems as though small businesses don’t even know where to start when going digital.

According to a new study by the Australian Industry Group (AI Group), small businesses in Australia find it particularly hard to understand how to leverage technology.

Feedback from small businesses to AI Group makes it clear that their struggle with technology is a result of the fact that, aside from not knowing where to start, they also find it hard to cope with the pace of change in the world of technology, don’t have the time to re-model their businesses using technology, and lack the skills, knowledge, and capabilities to make any real change.

To better understand the widening digital gap between small businesses and large enterprises, AI Group surveyed CEOs about how they use the internet and found some interesting insights:

# 1 | Digital marketing is still a challenge

According to the findings of the report, larger businesses are more likely to advertise online (77 percent) than medium (69 percent) or small (56 percent) firms.

Further, the report revealed that industries such as agriculture, transport, utilities, construction, mining, healthcare, administrative and professional services tend to use digital marketing less frequently than the national average.

While it’s interesting to note that digital marketing hasn’t really taken off among small businesses in Australia, the reality is that this avenue is one of the easiest to understand with plenty of support provided by agencies and platforms alike.

Facebook and Google often offer training to support SMEs in local markets. Small businesses must actively lookout for these and other programs to augment their skills and leverage the technology.

# 2 | Online data storage/analytics is hard to understand

AI Group found that more than three-quarters (77 percent) of large businesses used data storage and analysis compared to over half of small (56 percent) and medium (54 percent) enterprises.

While the report said that smaller businesses often lagged behind larger businesses in the take up of online technology despite the low-cost entry barriers and efficiency gains that may result, it also pointed out that a lot of businesses (even mid-sized organizations) didn’t see the value in cloud computing and storage.

Larger organizations that didn’t move to the cloud cited security concerns, while smaller organizations, especially small businesses, said that they didn’t understand cloud computing well enough to invest buy into it.

# 3 | The need for online applications is questioned

The report found that large businesses were more likely to use online applications (81 percent) than medium and small businesses (58 percent and 50 percent, respectively).

Further, the report highlighted that medium and large businesses were more likely to use cloud computing (66 percent and 76 percent, respectively) as compared to than micro and small businesses (36 percent and 50 percent, respectively).

Where paid cloud computing was used, most businesses used it for software (89%) including email, office software, finance or accounting software and CRM software.

Small businesses don’t seem to want to invest in cloud-based applications — instead, they rely on traditional methods of record-keeping using basic spreadsheets and documents.

Small businesses need a little help with going digital

While small businesses in Australia find it hard to go digital, the reality is that when they’ve got support from a good partner, they tend to leverage technology quite effectively

# 1 | Small businesses are effective online sellers

According to the AI Group study, just over two-thirds (69 percent) of all Australian businesses used the internet to sell goods and services.

Data in the report suggests that there is little to no variation across the sizes (small 71 percent, medium 65 percent and large 68 percent) of business — and for the first time, it seemed as though small businesses use technology more efficiently than large businesses.

While the report doesn’t delve into the reason why small businesses in Australia seem to be doing well with online sales, a percentage of the success could be attributed to the rise of platforms such as Uber Eats, Airtasker, and Deliveroo and the onboarding support they offer to small businesses.

# 2 | Small businesses leverage online buying platforms

AI Group data suggested that nearly two-thirds of businesses (65 percent) ordered online from suppliers. Threequarters of construction firms (76 percent) were more likely to order online compared to two-thirds in manufacturing (65 percent) and services (64 percent).

The report highlighted the fact that there were no notable differences between the size of a business and its likelihood to order online — indicating that small businesses were at par with large businesses in this area.

Although the report is silent about why businesses order online or the platforms they use, it is likely that, as far as small businesses are concerned, the convenience and the deep discounts that placing orders online make possible are a big draw overall.

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