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Benefits of small business digital engagementDepartment of Employment, Skills, Small and Family Business

What’s the prize for digital leadership?© 2019 Deloitte Touche Tohmatsu 2

Small businesses by numbers

© 2019 Deloitte Touche Tohmatsu 2

Percent of small businesses are

startupsThe average age of small

business owners

Percent of small businesses are

sole traders

4813 Years – less

than two thirds of businesses survive this long

Top industries for small businesses: Construction, professional services and health

57

4

3

Sources:• Australian Bureau of Statistics (2018) Census of Population and Housing 2071.0

https://www.abs.gov.au/ausstats/[email protected]/Lookup/by%20Subject/2071.0~2016~Main%20Features~Business%20Owner%20Managers%20Across%20Australia~23

• Lesh, M. (2018) Australia a World Leader in the Decline of Business Startups, available at: https://ipa.org.au/publications-ipa/media-releases/australia-a-world-leader-in-decline-of-business-start-ups.

• Australian Bureau of Statistics (2019) Counts of Australian Business 8165.0, Feb 2016 & ASBFEO calculations, available at: https://www.asbfeo.gov.au/sites/default/files/Small_Business_Statistical_Report-Final.pdf

https://www.abs.gov.au/ausstats/[email protected]/Lookup/by%20Subject/2071.0~2016~Main%20Features~Business%20Owner%20Managers%20Across%20Australia~23

https://ipa.org.au/publications-ipa/media-releases/australia-a-world-leader-in-decline-of-business-start-ups

https://www.asbfeo.gov.au/sites/default/files/Small_Business_Statistical_Report-Final.pdf


Top aspirations of small businesses

Be my own boss (14%)

Acquiring new customers (11%)

Provide income to save for retirement (12%)

Work life balance for you and your staff (10%)

Consistency of revenue streams (12%)

Growth in sales (10%)

Note: Top 6 out of 14 possible responsesSource: Deloitte Access Economics analysis based on Dynata survey data (2019)


Making the most of digital


We are a bricks and mortar store in

Victoria Park with an online shop run from

the store. It is nearly 2 years since we

opened and need help to implement,

manage and navigate the ever-changing

intricacies of SEO, social media analysis,

online products and their selling platforms,

inventory and maintaining an online

presence on social media.

Source: Urban Revolution (2019)


Digital comes in many forms

Digital marketing

Infrastructureand data

Customer relationship

management

Social media strategy

Business

analytics

Marketing automation

Cloud

Cyber security

Website and e-commerce

Inventory management



Classifying digital engagement among small businesses

Basic

Businesses who only have a business email address and use traditional methods of marketing (e.g. post, newspapers). No social media or website.

Intermediate

Businesses who have a website, and may also be listed on an online marketplace or third-partye-commerce platform (e.g. eBay). Some use of social media and basic online marketing (e.g. webpage ad banners).

High

Businesses with a mobile-responsive website, which may also have e-commerce or booking capabilities. Extensive use of social media and higher level online marketing methods (e.g. search engine optimization, search engine marketing).

Advanced

Businesses that use data analytics to analyse customer information and inform decisions. Use of advanced online marketing tools such as search engine marketing, social media advertising, and video advertising.

Source: Deloitte Access Economics, Connected Small Businesses (2013, 2016, 2017)


Small business digital engagement is accelerating

PUBLIC

30%

15% 11%

36%

46%

34%

28%32%

41%

6% 7%14%

0%

20%

40%

60%

80%

100%

2016 2017 2019

Basic Intermediate High Advanced

Source: Deloitte Access Economics (2019). Based on analysis of data from Deloitte Access Economics (2016 and 2017) Connected Small Businesses, and 2019 Dynata data. Note: Based on small businesses only (<20 employees).


Relative to business with basic levels of digital engagement, advanced businesses…

For every step up the digital ladder, businesses

earn more revenue per employee

Achieved

28%more revenue growth in the past 12 months

60%more revenue earned per employee

Digital engagement leads to better business outcomes

© 2019 Deloitte Touche Tohmatsu

Source: Deloitte Access Economics analysis based on Dynata survey data (2019)


Top benefits of digital

Improving business efficiency

Meeting customer demands

Increasing sales and revenue

Accessing new customers

Note: 4 out of 15 possible responsesSource: Deloitte Access Economics analysis based on Dynata survey data (2019)

© 2019 Deloitte Touche Tohmatsu


Digital enables business owners to work smarter

More than 50% of businesses say that if they were able to save time on business processes, they would spend the additional time on work (rather than social activities, sleep, or exercise).

Source: Deloitte Access Economics analysis based on Dynata survey data (2019 Photo: Platypi Chocolate (2019)


Costs are the main barrier to digital engagement for small businesses

20%

26%

31%

20%

13%

Data securityconcerns

Not relevant tomy business

Costs No barriers, justhaven't thought

about it

Unsure how touse digital tools


Note: Top 5 out of 8 possible responsesSource: Deloitte Access Economics analysis based on Dynata survey data (2019)


Spotlight on businesses with a basic level of digital engagement

Don’t Know

51%

The biggest barrier to digital engagement: believing technology to be irrelevant for their business

These businesses are less goal oriented – the top response for their organisational goals was ‘don’t know’ (16%).


The top ranked benefit of digital engagement

Source: Deloitte Access Economics analysis based on Dynata survey data (2019)


Why is the Small Business Digital Champions Project important?

The Project has 100 participating small businesses – many at

the intermediate level of engagement

Deloitte has made 156 recommendations in Digital

Transformation Plans to date

Across Australia there are 1 million businesses at the basic

and intermediate levels of digital engagement who need help

moving up the ladder


Appendix: Survey and modelling approach

SurveyData for this project was gathered using an online survey undertaken by Dynata. Dynata surveyed a sampleof 507 Australian SMBs with fewer than20 employees. Note that while thisis the same methodology as the previous Connected Small Businesses analyses, the previous analyses also considered medium-sized businesses and surveyed businesses with less than 200 employees (in 2017 and 2016) and less than 100 employees (in 2013). Where data is compared across years, the sample with less than 20 employees was used.

Respondents to the survey wereeither business owners themselves, ordirectors or managers of an SMB. As part of the survey, respondents were asked questions about the business’ levels of engagement with various digital tools, performance with respect to metrics such as revenue and employment growth, and general business characteristics such as age, industry and location.

Digital engagementclassificationEach small business was classified into one of four levels of digital engagement. This classification was based on their use of and engagement with a number of different types of digital tools, as outlined in the ladder presented on page 6.

EconometricsEconometric modelling is used to identify the relationships between small business digital engagement and business performance and characteristics of the owner or manager. Modelling to determine the benefits of digital engagement was conducted in the 2017 and 2016 reports, and were broadly consistent with the previous years.

CausalityIt is important to note the general issue of causality for current and previous modelling. For the previous modelling it is possible that higher levels of revenue growth drives more digital engagement if strongly performing businesses had more time or resources to undertake digital take-up. Equally, given the ways in which engagement helps growth – through employment, exports and innovation and based on the evidence of our case studies, the most common story is one of digitising businesses reaping benefits.

InterpretationThe reported results are the marginalimpacts after controlling for otherbusiness characteristics, including size,age, location and industry, which means that individual experiences with rising digital engagement are likely to vary.

Deloitte Access Economics is Australia’s pre-eminent economics advisory practice and a member of Deloitte's global economics group. For more information, please visit our website: www.deloitte.com/au/deloitte-access-economics

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©2019 Deloitte Access Economics. Deloitte Touche Tohmatsu

General use restrictionThis report is prepared solely for the use of the Department of Employment, Skills Small and Family Business. This report is not intended to and should not be used or relied upon by anyone else and we accept no duty of care to any other person or entity. The report has been prepared for the purpose of set out in our engagement letter. You should not refer to or use our name or the advice for any other purpose.

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