Australian small businesses that increase their investment in technology grow their revenue and create jobs faster than other businesses, according to data from Xero Small Business Insights.

The new research shows technology investment is directly associated with business growth. However, according to the research, Xero subscribers in Australia spend less than 1 per cent of total revenue on ICT each year. This expenditure relates to categories including: internet, telephone, mobile, computer, telecommunications, broadband, NBN and ADSL.

The data update, ‘Wired for Success: the impact of technology spending on small business’, is based on anonymised and aggregated data from Xero Small Business Insights and was prepared by AlphaBeta Advisors.

It finds that small businesses:

  • that increase their spend on information and communications technology (ICT) are 68 per cent more likely to be growing
  • with higher ICT spending growth grew revenue 3.5 percentage points faster than those with lower ICT spending growth
  • with higher ICT spending growth grew employment 5.2 percentage points faster than those with lower ICT spending growth

Andrew Charlton, Director, AlphaBeta Advisors, said, “Small businesses have a huge opportunity to take advantage of increasing broadband connectivity and harness cloud-based business productivity tools. Among Xero users, 35 per cent of medium sized businesses and 44 per cent of larger small businesses are connected to third party apps delivering valuable insights and time savings to business owners.”

The research also examined the roll out of the NBN and access to faster broadband on driving greater levels of digitisation and growth opportunities.

Xero Small Business Insights data has found that, among businesses on Xero, those in mature NBN regions grew employment by one-third more (2.6 percentage points) than businesses in non-NBN regions in 2017.

“In Australia we are at an inflection point for technology adoption for small business and we have to ensure that they surf this wave. Small business is best placed in terms of size and agility to take advantage of new ways of working,” said Trent Innes, Managing Director, Xero Australia and Asia.

Innes also warned of a digital divide emerging between small businesses and large enterprises.

“Xero is calling on small business to take a fresh look at their investment in technology to ensure they are in lock-step with big business, taking the first mover advantage where possible. Access to advanced technologies has also never been more prevalent or democratised – from cloud computing to digital ecosystems – putting powerful services and tools into the hands of anyone with a mobile or laptop,” Innes said.

“While we see large enterprises well on their way to digital transformation, taking advantage of a range of powerful new technologies from AI to blockchain, we have to avoid the dangers of a new digital divide — one between small and big business. Having a two-speed tech economy would be a disaster for Australia’s productivity and growth, particularly given small businesses generate a fifth of GDP and employ nearly half of all workers.”

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