At Xero, we’ve seen how cloud-based accounting software can transform a small business. But what about investing in technology more broadly – how does that affect small business outcomes? New research from Xero Small Business Insights shows that greater technology investment tends to be correlated with business growth. And that’s an important point for business owners looking to boost their odds of success.
To examine the effects of technology spending, we looked at aggregated, anonymised data from more than 100,00 businesses on the Xero platform. Then we examined the levels of spending on Internet, telephone, mobile, computer, telecommunications, broadband, NBN and ADSL. We found that higher technology investment is directly tied to faster revenue growth and employment.
While these are correlations, and not necessarily causal, it’s hard to ignore the relationship between greater tech spending and positive business outcomes.
Australian small businesses are among the world’s fastest adopters of cloud computing
Australian small businesses are among the fastest adopters of business technology in the world. In a comparison of 30 OECD countries Australian small businesses were ranked:
3rd highest in the OECD in terms of businesses purchasing cloud computing services
5th highest in the OECD in terms of businesses using social media
However, despite Australia’s world leading position, there is still a lot of room for improvement. Two-thirds of small and medium businesses (SMBs) are still not yet connected to truly high-speed broadband such as cable or fibre to the premises. And around 15 percent of small businesses use no IT in their accounting functions.
Key actions for small businesses to lift digital connectivity and drive growth
- Get connected
Two-thirds of small and medium businesses (SMBs) are still not yet connected to truly high-speed broadband such as cable or fibre to the premises. And around 15 percent of small businesses use no IT in their accounting functions. The completion of the NBN rollout over the next two years will mean that fast, reliable broadband should be within reach of every Australian business. Connectivity enables small businesses to access digital technologies to help them reach more customers and digital tools to boost their productivity.
- Grow your presence
Connectivity enables small businesses to grow their presence. Small businesses can use online directories, websites, social media, search engine optimisation, automated email advertising and many other digital tools to broaden their customer reach.
- Put the cloud to work for your business
More and more Australian businesses are tapping into the cloud and putting new tools to work for their business. Among Xero subscribers, 35 percent of medium-turnover businesses ($500,000 to $1.99 million) and 44 percent of large-turnover businesses (more than $2 million) use third-party apps that integrate with the Xero platform. Business intelligence and clerical apps are the most common because they deliver valuable insights and time savings to business owners.
We estimate the use of a business intelligence app, such as Spotlight Reporting, Futrli and Fathom, saves a Xero subscriber an average of about one hour per week.
We estimate that a clerical app such as Receipt Bank saves a small business on Xero between 30 and 90 minutes per week.
In addition to apps that fulfil general functions common to all businesses, there is growing specialisation in apps that address pain points in specific industries such as health care, construction and agriculture.
- Get protected & be cyber safe
Cyber security is a big problem for Australian small business:
– Small business is the target of 43% of all cyber-crimes.
– However around a third of small and medium businesses don’t take proactive measures against cyber security breaches.
– The Australian Bureau of Statistics reports that 16% of Australian businesses experienced internet security incidents or breaches.
– Downtime of customer service was the most common impact (54%) of a security breach.
For more information on what to do about small business cyber-security see here.