Australian small businesses trail rest of APAC: CPA
A recent survey from CPA Australia placed Australian small businesses last or near last on nearly all vital indicators.
Inadequate use of technology and a lack of young entrepreneurs continue to undermine Australia’s small business market, said CPA Australia.
CPA's most recent Asia-Pacific Small Business Survey placed Australia at or near the bottom among 10 other APAC nations, including China, Hong Kong, India, Malaysia, Singapore, Indonesia, and the Philippines.
Australian small businesses were considered the least likely to have grown over the past year and the least likely to grow over the next year. Moreover, they were the most likely to be negatively impacted by rising costs, the least likely to increase headcounts, and their owners were the least optimistic about the economic outlook.
In 2023, 40.9 per cent of Australia's small businesses experienced overall growth, compared with the APAC average of 59.6 per cent. Australian small business owners reported the second lowest levels of satisfaction with their financial returns.
Looking forward, fewer small Australian businesses are expected to enjoy growth this year than any other captured nation. In APAC, 69.7 per cent are set to grow while, in Australia, the odds favour only 53.3 per cent.
The low growth projections correlate with deflated expectations for the national economy. Only 29.5 per cent of small business owners expect Australia’s economy to grow over 2024, compared to an APAC average of 65 per cent, making the Australian cohort the least optimistic.
According to Gavan Ord, business and investment policy lead at CPA Australia, the disparity comes down to two main factors. First, Australian businesses are technology laggards, both in terms of adoption of new technologies and their preparedness to adapt to a changing tech landscape.
“To improve Australia’s economy and increase its competitiveness, policymakers need to significantly increase the proportion of small businesses incorporating new technologies into their business,” he said.
By APAC standards, small Australian businesses make little use of online sales, derive little profitability from technology investments, engage with fewer IT consultants, and underutilise digital payment options.
“Australian small businesses are among the least likely to report notable revenue from online sales. Having digital tools is one thing, properly using them to grow the business is another,” said Ord.
Australian respondents ranked last or second-last on all technology metrics except for using social media for business purposes, for which they placed second, doubling the APAC average.
“This slow pace of technology adoption is hurting both individual businesses and the economy as a whole,” he added.
The second contributor highlighted by Ord was the lack of young entrants to Australia’s young business market. According to the survey, Australia has the lowest proportion of businesses run or owned by people aged under 40 years.
“Inspiring young people to start a business, or purchase an existing one, will be a crucial part of our future economic success,” said Ord.
Innovation, he said, is driven by young people and combined with higher risk tolerance, they are most likely to reap significant growth.
Presumably, the underrepresentation of young entrepreneurs in Australia contributes to the lack of small business tech adoption. According to the UN, young people are typically among the earliest adopters of trending technologies.
This makes them “poised to take advantage of innovations in this area to drive the impact of social entrepreneurship.”
Indeed, the UN’s World Youth Report 2020 argued that traditional job creation will not meet the needs of global youth unemployment. Instead, young people must “create their own employment” through technology-driven entrepreneurship.
CPA Australia pled a similar cause in a federal budget submission released on Wednesday, in which it encouraged the government to “track and report on the sage of small business owners.”
“Getting more young people into business – and nurturing their entrepreneurial spirit – can only be a good thing for the economy in the long run,” said Ord.
