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The tumultuous economic environment is taking its toll on a number of Australians, with SMEs struggling to be productive under its constraints.
More than two-thirds (68 per cent) of small and medium enterprises (SMEs) report their productivity is being constrained by the current economic climate, according to recent research from MYOB’s Bi-annual Business Monitor.
Various factors from the economic environment are putting pressure on SMEs, making it difficult for them to thrive. Fuel pricing (41 per cent), cost of utilities (38 per cent), and interest rates (30 per cent) are putting the most pressure on SMEs, and more than a quarter (27 per cent) said price and margin profitability is weighing on business performance.
For small businesses, productivity will be of the utmost focus as they face a tightened economy in the year to come. This leads to 34 per cent of SMEs believing improving skills and training programs would boost employees’ productivity, followed by government grants to improve skills and training (31 per cent).
Emma Fawcett, general manager of SME at MYOB, said: “The nation’s 2.5-plus million SMEs have shown resilience throughout the last few years, and with further difficulties anticipated as the economy stabilises, it will be important to review their business productivity to ensure they are setting themselves up for security and growth.”
Although dependence on support from the government around skills programs and training is a crucial aspect of improving productivity, businesses have adopted other avenues.
Twenty-one per cent of respondents have digitised more of their operations in the last 12 months, which has led to 39 per cent of them being more productive as a result. Thirty-four per cent of those who have increased their digitisation said it helped them to work remotely and collaborate.
“Digital capabilities are closely linked to productivity, helping SMEs save time, money and improve accuracy in their business operations, as well as drive economic growth in uncertain times. Despite the benefits it brings to the bottom line, cost remains a barrier,” Fawcett said.
“Only one in 10 respondents (11 per cent) are looking to increase their investment in IT systems and processes in the coming year.”
Technology can be a crutch to lean on for SMEs throughout this tough period, but gaining an understanding of how to properly implement it should be of the utmost importance.
“This challenging period is not yet over for the nation’s SMEs, so any emphasis they can put on driving productivity and boosting their performance will hold them in good stead. As contributors to 99 per cent of the nation’s GDP, it will also help build a stronger economic outlook,” Fawcett said.
Kace O'Neill
Kace O'Neill is a Graduate Journalist for HR Leader. Kace studied Media Communications and Maori studies at the University of Otago, he has a passion for sports and storytelling.
