How supporting digital fluency in SMEs could unlock $10.5 billion for Australia’s economy

While the lockdowns of the last two years presented us with many stories of small businesses pivoting to embrace digital and connect with their customers online, the reality is many of Australia’s small and medium enterprises (SMEs) are still falling behind in their digital fluency.

SMEs contribute significantly to Australia’s economy, employment and sense of community, yet a digital skills gap means many aren’t in a position to scale or stay relevant in an increasingly digital world.

A 2020 Venture Insights report found 39% of SMEs are failing to grasp the opportunities offered by new technologies, and 31% are struggling to keep up with technological changes critical to their success.

At an even more essential level, our January 2022 MYOB Business Monitor found 37% of SMEs don’t have an online presence, and only 20% have both website and social media. In fact, 51% of rural businesses have no online presence at all, and 85% of SMEs admitted they were unprepared for the disruption to their business caused by the pandemic.

In the 2020-21 Budget and Digital Economy Strategy, the federal government focused on improving SME digital skills by allocating funding to the Australian Small Business Advisory Service (ASBAS) and planning government-led courses to digitally re-skill the workforce by 2023. However, by failing to put equal focus on digital business management skills, the government missed the opportunity to empower SMEs to lead their own recovery, and to capitalise on the opportunities presented by digital technologies for small business.

Now is the time to support small businesses with a pragmatic, industry-led approach to narrowing the digital divide. With the digital landscape evolving rapidly, we need agile responses to digital training for small businesses, which can respond to bespoke business needs and get things happening within months, rather than years.

Helping small business owners understand the technology landscape and its potential for their business means they can make informed decisions about how they choose to use digital tools.

Digital skills for small business must be a priority

We see an opportunity for the government to use the upcoming budget to maximise the skills agenda, by supporting the industry-led creation of micro-credentials, focusing on digital business management skills. These skills are key to advancing all areas of a business, and micro-credentials targeting core business processes can be easily deployed.

We’ve heard firsthand from industries that an industry-led program with relevant and targeted digital training would be welcomed with open arms. For example, we’re currently working with the Master Builders Association to help it identify digital skills gaps within their sector, and create specific programs to fill them.

For the government and big business, it’s easy to forget that many small and medium Australian businesses find the world of digital transformation a daunting place. By creating industry-led programs to help improve digital fluency, we’re responding to business needs, and not wasting resources on training that misses the mark.

With almost 500,000 SMEs missing out on technical acceleration, policies targeting business-led recovery and skills development that don’t also embed digital business fluency miss a pivotal moment for effective reform.

From the essentials of creating an online presence to better connect with existing and potential customers, to understanding the business potential of connected SaaS tools and better digital processes, facilitating meaningful digital adoption for small business needs to be a priority.

The technology landscape doesn’t stagnate, and neither should Australian SMEs. Giving businesses the opportunity to lift and deepen their digital engagement is key to boosting productivity and improving scalability.

Existing policy and budget measures, such as the government’s skills agenda and the temporary full expensing scheme, fall short of facilitating meaningful digital adoption. Improving digital fluency will help small businesses future-proof for a digital world.

Our analysis reveals that improving access for the one in five businesses that have little to no digital presence will lead to a 1.8% increase in SME GDP — the equivalent of a $10.5 billion gain for the Australian economy.

Let’s get behind our small business community in a meaningful way, with investment in the digital skills our business leaders actually need. Their future depends on it.