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Digital divide widens between online-savvy & online-cautious SMEs

26 Mar 2014

As more small and medium business operators experience revenue growth due to the use of online technologies, the divide between the online-savvy and the online-cautious is widening.

The March 2014 MYOB Business Monitor revealed a higher proportion of online-savvy businesses reported revenue growth in the year to February 2014 and expect future revenue growth than those without online technologies.

The growth expectations of online-savvy businesses is likely fuelled by their current workload, with almost half of SMEs who use cloud technology and over two fifths with a website and a social media site reported increased sales or work in their short-term pipeline.

In contrast, slightly more than one quarter of SMEs without a website reported more pipeline work.

The study of 1,032 SMEs also found an increase in the use of online technologies. The proportion with a website is now 42%, up from 38% six months ago. A similar trend occurs for those using social media (39%, up from 33%), and cloud computing (33%, up from 16%).

The use of tablets such as an iPad or other device has risen to 27% from 24% six months ago. Smartphone usage was slightly down from 46% to 43% in the same period. A similar proportion of operators don't have an online presence for their business, at 43%.

MYOB chief strategy officer John Moss, says the difference between online businesses and those that don’t have an online presence is marked across a range of business performance measures.

“What’s clear to us from our years of conducting research into SMEs’ use of online technologies is that businesses with an online presence reach more people and are more engaged with their customers," he says.

"This translates to stronger business performance. For example, those with a website are 56% more likely to see annual revenue rise, and those who use cloud computing are 30% more likely to do so.

"Businesses that embrace online technologies also have more work in their short-term pipeline.”

“It’s evident the digital divide among SMEs is widening, and we strongly believe it’s time for more business operators to take a look at the benefits of easy-to-use online technology for the health of their business.”

More confidence, more contribution

Buoyed by their performance, SMEs with a website are more positive about the economy, with nearly one third expecting an improvement within 12 months, compared to nearly one quarter of businesses without a website.

“Online businesses are more likely to be making a contribution to wider economic growth, including improved job opportunities for Australians,” Moss adds.

“18% of businesses with a website and 18% with a social media site are planning to increase their full-time staff this year. That’s a considerably higher number than the 7% of businesses without a website and the 9% without social media who are looking to hire this year.”

Email & online banking most popular online services

“We also asked business owners and managers to identify the online services they used in their business,” Moss adds.

“The top five online services were email at 76%, online banking at 69%, social networking at 29%, buying products and services online at 22%, and email marketing, VOIP and file sharing - each at 21%.”

Over one third of SMEs (38%) now accept some form of online payment via a shopping cart, while 21% use search engine optimisation and 18% use search engine marketing as a way of promoting their business, 16% have an e-commerce facility within their website, and 12% use other websites to sell products and services.

LinkedIn most popular social media avenue for business

According to the survey, LinkedIn is the most popular business social media platform, with 18% of SME operators using their profiles to connect with colleagues and other business people. 17% have a Facebook page for their business, while 8% have a Google+ business page. 6% communicate via Twitter, while 5% use YouTube as a vehicle to connect with customers.

Businesses mostly likely to be connected

When looking at online business activity by mainland states, Western Australia are the most connected, with 37% of businesses using cloud computing and 19% with a business website and social media site. South Australia was least likely to use cloud computing (21%) and a business website and a social media site (14%).

In terms of industry, those in finance and insurance were the most likely to use cloud computing (42%) while operators in agriculture, forestry and fishing were the least likely (12%).

Operators in retail and hospitality were the most likely to have a business website and a social media site (25%) while those in agriculture, forestry and fishing were the least likely (6%).

Comparing operators via business tenure, operators in establishing businesses were the most likely to use cloud computing (42%) and a business website and a social media site (18%), while established businesses were the least likely to use these online technologies (17% and 11% respectively).

Operators based in city and metropolitan areas were the most likely to have an online presence (57%), while rural-based operators were the least likely (38%).