Small businesses that are actively using digital technologies such as social media and online marketing could see an average annual revenue increase of $350,000 a year, according to Deloitte Access Economies' latest report, Connected Small Businesses.
Deloitte launched the report with Google Australia and MPs Malcolm Turnbull and Bruce Billson in Sydney on Monday. Five hundred small Australian business owners were surveyed. Participants ranged from having a low level of digital engagement, such as only using an email address, to a high level of engagement, such as making use of search engine optimisation and search engine marketing.
The report found that more than half (59 per cent) of respondents have a low to very low level of digital engagement, with only 16 per cent making it in the high level category.
The report pointed out that small and medium size businesses make a significant contribution to private sector economy at 57 per cent ($530 billion in 2010-2011) and to private sector employment at about 70 per cent (around 2.4 million people in 2010-2011).
“Technology and the Internet early on were seen as a way if increasing productivity, reducing costs internally. Well, that’s not the main game here,” Ric Simes, partner at Deloitte Access Economics, said at the launch event.
“The main game to begin with is because your customer base is already very digitally engaged then you better be too. So to maintain that customer base you need to be investing in digital technologies. But more than that is to facilitate new growth, get into new markets effectively.”
Almost 75 per cent of respondents attributed revenue growth to reaching new markets and customers through digital technologies. Small businesses with a high level of engagement saw more than one third of their total revenue from reaching new customers within their local market.
Simes says small businesses owners who don’t make a lot of use of digital technologies don’t have to feel compelled to jump straight into a high level of engagement in order to see the benefits in revenue growth. He said by building a low-cost website and having an online presence could increase the chances of growing from 28 per cent to 43 per cent.
However, the report acknowledged that not having the level of capital that large businesses have to invest in technology and limited access to knowledge and skills can be common barriers for small businesses in getting started with creating a presence online.
Google Australia’s Jason Pellegrino said that the Google Engage program is designed to help small businesses overcome these barriers by offering access to low-cost and free tools and offering digital experts.
“We provide a number of essentially free tools so there is no cost associated with [using those tools]," he said. "[For example],the ability to actually set up a website for free and communicate [through] that website, the ability to engage in social media through Google+ and actually engage with an audience for free.
“It’s also not enough to have vendor-driven advocacy of why a particular technological tool is the ‘bee's knees’. What you need is someone who can sit down and show a genuine interest and understanding in the business that they are working with and then how the various menu of technological capability works well for that business in its context and with its business objectives in mind.
“So far we’re looking at engage around 3000 digital experts who will then go out and touch around 100,000 small businesses and that will continue to grow. So that is one way of actually enabling [small businesses] and breaking down that barrier.”
In February, Australian of the Year Ita Buttrose spoke to an audience of IT professionals at the Internet Industry Association's (IIA) 16th Annual Gala Dinner in Sydney, urging the IT industry to help small businesses realise the benefits that technology can provide. She said at the time that around half of small businesses still do not have a website, making this a concern for the Australian economy.
Buttrose gave an example of how a small Australian company called Paperbark Camp was able to grow its business and reach customers oversees by simply having an online presence.
With Tourism Australia linking to Paperbark Camp’s website and Facebook page, listing the small company as a travel destination, “it went from having 423 to 7000 likes almost overnight and they are now taking bookings from people around the world,” Buttrose said.