How tech and the government’s digital infrastructure budget announcement affect SMBs
Following the onslaught of COVID-19, Australia's small businesses are being faced with huge change. As the sector adjusts, prioritising investment in the nation’s digital capabilities has become as fundamental to our future as investing in the physical infrastructure of roads and rail. But if the small business sector is to fuel our recovery plan, this transition must be sustainable.
We’ve already been given a glimpse into how the 2020 federal budget will champion digitisation and signal confidence in a digitised economy. The JobMaker Digital Business Plan will devote $800 million towards measures that include helping businesses take advantage of digital technologies. This is a promising step. But in order for small businesses to succeed, the government now needs to take the lead on enabling them to embrace digital technologies.
Charting the sudden acceleration of tech adoption
Periods of economic downturn have historically accelerated existing trends and, in 2020, one such trend is the accessibility of digitisation. Just as ABS data showed a rapid year-on-year growth of 72.5% percent in online retail sales in July, seemingly overnight our news feeds were filled with droves of bricks and mortar businesses making the move online.
In the Prime Minister’s words, right now, many businesses are, “Undergoing a decade of change in months, finding new customers or new ways of doing things.” And those that are doing so are reaping the benefits, with Xero Small Business Insights (XSBI) revealing the heightened resilience of digitally enabled businesses.
The latest XSBI data shows that small businesses that engaged more heavily in the use of apps experienced revenue falls one-third smaller and job losses 40% lower than other businesses during the COVID-19 pandemic. A separate Xero survey found that nearly one third of businesses were planning to adopt more digital tools if the federal budget outcome was favourable.
Facilitating sustainable change for small businesses
The real challenge, however, lies in ensuring that this level of large-scale change is achievable and sustainable for small businesses across the country, wherever they may be in their digital journey. This concern has been acknowledged in the distribution of the JobMaker Digital Business Plan, with the bulk of the funding going towards consolidating ASIC’s Business Registers and the Government’s digital identity framework.
These measures will help crack down on phoenixing, enabling the government to identify businesses doing the wrong thing and ensure more small businesses get paid in full for the work they do. This boost to internal government processes is designed to help give small businesses the confidence to fully engage in the economy once it reopens entirely.
As part of this procedure, the government has mandated the use of e-invoicing by Commonwealth agencies – an important move towards encouraging its widespread adoption. Like Single Touch Payroll before it, e-invoicing represents a crucial next step in the digital support of small businesses. For years, the procurement and payment process has held small businesses back by being slow, costly and prone to error.
For lasting change to happen, we’ll need widespread support beyond government-led reform. First, we need big businesses to get on board and adopt e-invoicing. Then, we need them to stand arm in arm with small businesses to use the technology available to solve late payment problems. Most importantly, we need to reduce any unnecessary points of friction that hold small businesses back.
Getting the entire country on board with change
Of course, if Australia's economy is to succeed, it’s integral that businesses in all corners of the country are accounted for. The recent $4.5 billion NBN upgrade, due to bring ultra-fast broadband to millions of families and businesses and create 25,000 jobs, is set to help ensure the digital shift extends deep into our towns and regional areas.
This investment recognises a change in behaviour brought on by the pandemic, with Australians now doing everything from conducting meetings to educating their children online. By fostering an environment that supports success for regional businesses, we stand to create jobs and economic activity that will benefit the entire nation. After all, with the help of a decent internet connection, you can now run a business anytime, from anywhere – and reach customers all over the world.
From embracing online systems to e-commerce and cloud accounting, businesses across Australia are adopting powerful and innovative legacies that promise to prove beneficial long after the COVID-19 crisis ceases. Now, the time has come to ensure that no one gets left behind. And with trusted advisors such as accountants and bookkeepers often acting as the primary source of digitisation advice, it’s essential that their skillset be leveraged.
With the announcement of this year’s federal budget, the government has acknowledged that investment in digitisation is key to small business recovery and our nation’s future prosperity. This is the all-important first step. Next, we need them to lead the way in building confidence and driving the digital agenda within the small business sector.
While the road to recovery may be long and bumpy, this way, we can enable the small business community to come back stronger and smarter than ever.
Angus Capel is Small Business Advocate at Xero