Tuesday, 03 July 2012 14:20

SMEs doing it tough, but urged to invest in IT


Faced by tough times, Australia’s small to medium sized businesses are still lacking confidence in the economy and have been urged to look at investing more in technology, including cloud-based solutions, as one way to help keep costs down and improve productivity and efficiency.

New research released today by business management solutions provider, MYOB, found that fewer than one fifth, or 19 percent, of the 1,004 business owners and managers surveyed nationally expected the domestic economy to improve within 12 months, but 16 percent of businesses say they will beef up their investment in IT systems and processes over the next 12 months.

According to MYOB CEO, Tim Reed, businesses should be looking at maintaining investment in marketing and IT, even in tough times, and he says “right now many cloud based solutions avoid the need to spend money upfront but bring immediate benefit.”

Reed encourages business operators to take a calculated risk to boost their profile and productivity, and possibly gain a competitive advantage. “With a relatively small proportion of business owners and managers planning to increase their marketing and advertising spend this year, those who do could very well see a spike in customers that flows through to sales. In tough times it can be tempting to cut back on brand building activities but take a step back and consider whether that really is the right move. Chances are your competitors won’t be.

“The same goes for your technology spend. Are there investments you can make this year that will result in time saved, improved team engagement and more productive processes? Right now many cloud based solutions avoid the need to spend money upfront but bring immediate benefit.”

According to Reed, over 30,000 of MYOB’s own clients have embraced MYOB Live cloud solutions in the past 12 months, “allowing their business to take advantage of great tools that provide them with the freedom to work anywhere, anytime.”

While this latest research for the MYOB Business Monitor found fewer than one fifth (19%) of SME owners and managers expected the domestic economy to improve within 12 months – unchanged from the March report this year which revealed the lowest percentage recorded since the March 2009 report – the study released today also found that almost one quarter, or 24 percent, believed any improvement was more than two years away.

For 61 percent of SMEs surveyed in this latest study, MYOB found that the value of their spending on marketing and advertising activities will remain the same, 19 percent will beef it up and 12 percent will reduce their investment.

A similar trend appeared with the investment in IT systems and processes – 66, 16 and eight (8) percent respectively.

Reed, says the survey found that fuel prices were expected to “cause the most pain in the next year,” ranking first and well ahead of all the pressure points surveyed for the third consecutive MYOB Business Monitor.  “Cash flow remained in position at second, while price margin and profitability overtook interest rates to reach third place. Interest rates dropped to fourth, equal with attracting new customers, which rose one place from the prior report.”

Only 18 percent of businesses surveyed reported an increase in revenue in the past 12 months, which was a slight decline on the 20 percent who said so in the prior report. MYOB found that more than twice that number (41%) said revenue fell, compared to 38 percent in the prior report, 37 percent experienced steady revenue and four (4) percent didn’t know.

Businesses in the construction and trade industries were hit hardest, with 52 percent experiencing a revenue loss in the past 12 months, closely followed by transport, postal and warehousing operators at 49 percent. MYOB also reports that the business, professional and property services industry was the most likely to see a rise (21%), closely followed by manufacturing and wholesale at 20 percent.

On a positive note, MYOB found that almost one third (29%) of business operators anticipated their revenue to rise in the next 12 months, more than the 22 percent who expected it to fall. Meanwhile, 43% percent saw it being stable and seven (7) percent were unsure, and 29 had more activity in their pipeline in the next three months than they would usually expect, but for 43 percent it was the same and for 27 percent it was less.

Tim Reed says “fewer than one in five small to medium business operators have enjoyed revenue growth in the past year, while more than two in five have seen their revenue fall. It is little wonder the vast majority can’t see our economy improving any time soon - two in three believe any improvement is at least one year away.”

“The new financial year is an ideal time for business owners to boost their potential for success by seeking smarter, more cost-effective ways of running their business. The $6,500 instant tax write-off for new assets, for example, can assist in the investment of new equipment that improves business productivity and cash flow.

And, Reed also urges SMEs to look at developing a website that is “included in major search engines,” as a “way to improve cash flow by attracting more prospective customers.”

Reed also says that with the carbon tax introduction, there are “tangible advantages for those who also take a proactive approach to reducing energy and material consumption, and lowering production costs.”

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Peter Dinham

Peter Dinham - retired in 2020. He is a veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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