CPA Australia’s 10th annual Asia-Pacific Small Business Survey has revealed that Australia’s small businesses are the second least confident in the region in their growth prospects for 2019, despite 47.3 per cent of businesses expecting to grow.

This compares to survey leaders of Indonesia, Vietnam and the Philippines which all record over 90 per cent of businesses that expect to grow in 2019.

Small business confidence in the growth prospects for Australia’s economy in 2019 is at its lowest point since 2011, with only 34.7 per cent expecting it to grow. Small businesses in Indonesia, the Philippines and Vietnam remain more than twice as likely as Australia’s small businesses to expect their local economies to grow in 2019. Hong Kong small businesses are the only ones with a lower level of confidence in their local economy in 2019. 

According to the survey, long-term growth prospects of Australia’s small business sector may be impacted by the comparatively small percentage of Australia’s small businesses that are undertaking activities and investments that characterise growing businesses – innovation, e-commerce, using social media and exporting.

The report found that the utilisation of technology stands out as an area of most concern. 

As an example, Australia’s small businesses continue to be significantly less likely to use social media for business purposes, compared with businesses from Asia. While just 3.7 percent from Mainland China stated that they do not use social media for business purposes, 44.8 per cent of Australian small businesses do not use social media.

As a result, Australia’s small businesses continue to be significantly less likely to earn revenue from online sales, with 59.8 per cent stating that they do not earn any revenue from online sales (compared with 5.4 per cent in Mainland China). 

CPA Australia’s manager of Business and Investment Gavan Ord says the survey shows there is a strong link between a stronger focus on online sales and business growth, using Singapore as an example.

“An overwhelming majority of small businesses in Singapore use social media for business purposes, with only 22.1 per cent who do not use social media for their business. The most popular use of social media is to promote their business, and the platform they get the most value from is Facebook. 

“Some small businesses could consider expanding how they use social media, with the survey showing that businesses that use social media to learn about the behaviours of customers and potential customers, and to receive and monitor customer feedback, are much more likely to be growing strongly,” Ord says.

For policymakers and others seeking to promote stronger growth in Australia’s small business sector, the report suggests improving the digital capability of small business is a must. With many Australian businesses having no or less than five employees, professional advisers such as accountants will play a critical role in building such capability. 

Longer term, the lack of focus on innovation, e-commerce, using social media and exporting may also impact business owners' retirement plans. According to the report, with a significant proportion of Australian small business owners close to or at retirement age, their lack of focus on digital technologies, innovation and exporting may be reducing the value of their business. This may have adverse impacts on their standard of living in retirement, particularly where they do not have large superannuation balances and are relying on the proceeds of the sale of their business to provide for them in retirement. 

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