10th May, 2021
Digitisation and the digital economy are hot topics in the lead up to Budget Night, but what should these terms mean to business owners?
The Federal Government has long touted the economic benefits of digitisation – a position backed by both business leaders and economists. And with Prime Minister Scott Morrison announcing plans to boost the Digital Economy Strategy to the tune of $1.2 billion, it looks set to feature heavily in tomorrow’s 2021-2022 Federal Budget.
Despite digitisation’s clear importance, Australia lags behind efforts to take its economy more fully online. It’s estimated that up to half a million Australian small and medium businesses (SMEs) have no or low levels of digitisation, resulting in lost revenue for individual businesses – and billions of dollars to the national GDP. (Up to $210 billion over 20 years, according to the Business Council of Australia.)
In this brief overview, we’ll outline how small businesses can get the most out of the digital transformation. We’ll highlight what digitisation means in practical terms, how small businesses can use it to their benefit, and why everyone stands to gain from a more digital economy.
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It doesn’t matter your line of work – if you’re in business, digital technology has the power to create efficiencies and boost profits. Despite this, just 9.1 percent of Australian companies invest in these tools. Fewer still have a dedicated digital strategy.
“One thing that holds many companies back is the belief that they aren’t a digital company,” said MYOB chief technology officer Darren Smith. “But with so many challenges to solve for in a business, there is always an opportunity to take up digital.”
The key, Smith says, is to prioritise which challenges you stand to benefit the most from addressing.
To do this, it helps to identify the challenges facing your business.
Every business is unique, but everyone essentially faces the same six problems: growing revenue, managing cash, managing suppliers, managing work in progress, managing staff and meeting compliance obligations.
“There are opportunities for digitisation in each of these,” said Smith, “improving either customer experience or operational excellence through digital tools.”
Start by focusing on one challenge and researching which resources exist to help solve it. (More on this below.)
As part of the Digital Economy Strategy, the government has signalled an intention for making advice on key digital decisions easier to acquire.
That’s where the Digital Solutions — Australian Small Business Advisory Services program comes in, offering small businesses advice and training on many aspects of digital strategy, through a combination of consultations, workshops and webinars.
Currently, the program is free for small businesses with up to 20 full-time staff for first-time use, and available at a subsidised rate thereafter, covering topics including online marketing and sales, cyber security and using small business software.
The program, which was established in 2018 and expanded in 2020 is flagged to receive a further $12.7 million in funding, with specifics on what this may mean for small business to be announced on Budget Night.
There’s no shortage of digital tools available to grow your small business. Some are industry-specific, but there are plenty of over-the-counter offerings designed to lift most companies.
Software that allows you to automate repetitive tasks is among the most common. Such programs will enable you to spend less time invoicing, billing or entering data so that you can refocus your energy on the growth-oriented parts of your business.
Communications technologies are also increasingly commonplace, and include everything from chat functionality to video conferencing and online whiteboard tools. These allow teams to work remotely, boosting collaboration and streamlining workflows.
Customer relationship management systems (CRMs) allow you to collect data about your clients and mine it for leads. With your customers’ data at your fingertips, you can gain powerful insights to help you better service your existing clients, and find new ones through digital marketing initiatives.
Most companies also stand to boost profitability and efficiency by deploying cloud services, which allow you to manage operations remotely. Users can share and mark up documents in real-time, making collaboration a breeze and rendering version control a problem of the past.
Investing in the right IT support is one of the easiest ways to set your business up for success. But like any project, it’s essential to do your research and set realistic goals.
“For smaller and medium businesses, over-investing in anything can be devastating,” Smith cautioned. With this in mind, it’s important to invest your efforts on adopting sustainable change.
One strategy is to start small, applying digital technology in one area of your business and monitoring its success before accelerating it to others. “It’s important to experiment and approach things with a scientific mindset,” said Smith. “Use data to guide investment decisions, to prove the value of changes before bolting them on for the long term.”
One of the first key pieces of technology for a digital business, MYOB has everything you need to begin taking your business management online. Find out more here.
While the benefits of digitisation are evident, there are legitimate reasons why small business has been slow to take operations online.
One of the biggest hurdles is time pressure. Business owners are often so invested in the day-to-day tasks of running a business that taking the time out to digitise systems and processes can feel difficult to justify. Yet in most cases the benefits exceed the costs.
According to research conducted by Telstra, businesses that invest in technology grow revenue three times faster than ones that don’t. Put in this perspective, a short-term realignment of resources away from day-to-day activity can be worth it.
Another common hurdle is cost. Purchasing or subscribing to software can hurt the hip pocket. Government support can go some way to mitigating the pain. Last year, the government introduced Temporary Full Expensing (TFE), a measure that, together with Temporary Loss Carry-Back rules, helps businesses towards a cash tax refund or reduces tax payable and invest in their business at the same time.
This policy allowed businesses to write off the depreciation of physical assets, such as computers – but not intangibles. Thankfully, the government appears to be taking digital tools and services more seriously: last week, it announced a plan to allow intangible assets to depreciate in the same manner as physical ones, making software purchases more affordable.
Smith says the expansion of the government’s Digital Economy Strategy is likely to be embraced by small businesses and their digital tech suppliers, but will need to go further to cover the full extent of technologies available.
“This is a welcome change that will improve the rate of digital uptake, which we hope to see expand to cover the Software-as-a-Service category, which is increasingly a preferred method for the consumption of digital services.”
Such moves are good news for small businesses, which stand to gain from any effort to further digitise the economy.
But success won’t be a one-way street. Australia’s 2.1 million small businesses account for some 33 percent of GDP. Boosting their productivity will create a virtuous feedback cycle, raising GDP and providing more revenue to reinvest back into small business.
This isn’t a vague prediction, either; according to recent MYOB research, every dollar the Australian Government invests in digital adoption stands to return as much as $25 to the Australian economy.
It’s clear that initiatives like the Digital Economy Strategy, which accelerate the adoption and use of digital tech, is good for the entire business community. For this reason, small businesses will be joined by their suppliers scouring tomorrow’s Federal Budget announcements for more news about digitisation.
Want to hear more about what the 2021 Federal Budget means for small business?
See our expert panel featuring the The Hon. Stuart Robert MP, Minister for Employment, Workforce, Skills, Small and Family Business, Dr Craig Latham, Deputy, Small Business and Family Enterprise Ombudsman and Helen Lea, Chief Employee Experience Officer, MYOB, discuss what the Budget means for your small business (from Friday 21 May at 9:30am-10:15 AEST). View it here today.