One in five small businesses left behind in the digital divide

MYOB says incentivising digital adaptation worth $10bn economic injection.

Nearly half a million Australian SMEs have no or very low levels of digitisation in their business and getting them online would be worth a $10 billion injection to the Australian economy, says business management platform MYOB.

MYOB calculates 466,062 SMEs – approximately 20% of the 2.29 million* sector – are not engaged with digital tools across critical areas of their business workflow, such as compliance and supplier management.

Fresh research of 1000 SMEs from MYOB** delves further into typical digital use among the small business community, finding 40% of businesses use digital cloud-based software for work in progress (WIP) management, 38% for managing their people and 37% for growth opportunities, such as marketing. Just 26% of SMEs are connecting with their customers on social media.

With SMEs with advanced levels of digitisation 50% more likely to grow revenue***, MYOB views support packages that bridge the digital gap for the one in five left behind as an economic imperative. MYOB forecasts a 1.8 per cent increase in the SME GDP contribution, or a $10.5 billion gain for the Australian economy, if remaining SMEs are brought up to speed.

MYOB’s Chief Employee Experience Officer - Helen Lea, says the most effective tool Government has at its disposal is the tax system and cloud-based software as a service (SaaS) products are the perfect gateway for SME digitalisation.

“Our new research tells us 24% of SMEs are worried new technology is too expensive and a further 24% don’t have the time to set it up.  Of the businesses who digitised during the pandemic, 39% found themselves to be more productive and 34% were more profitable. Eighty-five per cent said they were able to keep their business running thanks to digital tools.

“For the one in five SMEs at risk of being left behind, a tax incentive that is easy for businesses to engage with, that is pointed out to them by their accounting and bookkeeping advisors with whom they speak regularly, will remove a significant hurdle to digital adaptation. Our research supports this: 27% of respondents shared that an incentive, such as a tax deduction, would help them get started.

“SaaS model software is custom built for the SME way of working. Cloud-based SaaS products allow businesses to work however and wherever they like and the subscription model allows a business to grow their software use with their operations.

“We are recommending to Government that they consider a refundable rebate on new SaaS subscriptions for SMEs with 0-199 employees, with a tiered incentive structure to promote end-to-end digitisation of businesses. This change alone we predict is worth $10.5bn to our economy in the short term.

“If you combine this with the annual saving of $23.5bn afforded by a mandatory introduction of B2B e-invoicing, adoption of which could also be motivated by this SaaS incentive, it’s a pretty compelling case for putting our trust in small businesses as Australia’s economy recovers and grows.”

MYOB has released a white paper outlining its SaaS tax incentive proposal in full. It can be accessed here: Closing the digital gap: an incentive for SMEs.

Ends

* ABS February 2021

** MYOB Business Monitor, June 2021

*** Connected Small Business 2017, Deloitte Access Economics

466,062 MYOB forecast based on SMEs, with no or low levels of digitisation, digitising or further digitising: Accounting; Production & Services Operation; Invoicing; Stock Control; Marketing; Human Resources (including Payroll); and Business Planning processes. SMEs are defined as < 200 employees. Growth comes from 100% of SMEs with low or moderate levels of digitisation, in addition to 50% of SMEs with no digitisation. This equates to a net of 36.6% of all SMEs (varying between 35.8% - 47.9% of SMEs depending on industry). Excludes Financial & Insurance Services; Public Administration & Safety; and Education and Training (due to insufficient data). Assumes a productivity-related revenue uplift of 9% based on international benchmark.

For more information please contact:

Collette Betts, MYOB, AU Corporate Affairs Manager
E: [email protected]

About MYOB

MYOB is a leading business platform with a core purpose of helping more businesses in Australia and New Zealand start, survive and succeed. 

MYOB delivers end-to-end business, financial and accounting solutions direct to businesses employing between 0 and 1000 employees, alongside a network of accountants, bookkeepers and consultants.

For more information visit myob.com or follow @MYOB on Twitter.