More than half of Australian SMEs in the dark about own performance
SMEs are short on time and money, but keep getting told to spend more of both.
New research from Commonwealth Bank has highlighted the key stresses faced by small- to medium-sized businesses (SMEs). Unsurprisingly, revenue is at the centre of it.
- Financial and revenue performance - 47% of businesses are experiencing moderate to high stress
- Sourcing business growth opportunities - 41% of businesses are experiencing moderate to high stress
- Managing cash flow - 41% of businesses are experiencing moderate to high stress
The study found SMEs are turning to forward planning and data analysis for answers. Unfortunately, it also found a lot of businesses are having trouble connecting the dots between having data, making plans and earning more money.
Does data help?
SMEs know data helps, but that doesn't mean it's helping.
45% of surveyed businesses spend over 100 hours a year (two hours a week) on planning, while 16% allocate over 260 hours a year (five hours a week) specifically to planning ahead. But of those, more than half (54%) felt like it wasn't very effective and wasn't living up to its potential. A quarter of them admitted that they weren't even able to assess whether or not their plans worked.
When asked about specifics, the results became even starker. More than half (54%) of respondents had little understanding of how exactly their financial performance was tracking year on year, while 74% didn't know how they were performing compared to their competitors.
Overall, about three-quarters of Australian SMEs might be in the dark. The importance of planning and data is well understood, but actually getting that information and translating it into revenue remains a problem.
"Having an intimate understanding of financial performance, the industry in which you operate, and about customer needs and preferences, can really set a business apart in a competitive marketplace," says Claire Roberts, general manager of Commonwealth Bank's SME business banking.
"Small businesses, in particular, are usually time poor, and not all have the right tools to support effective business planning."
The Commonwealth Bank Daily IQ platform around which this study was based shows how low the barrier to entry into "big data" is now. It's free for Commonwealth Bank business customers and includes features such as:
- Daily, weekly and monthly cash flow tracking and visualisation, as well as comparisons to the same period last year.
- Tracking and visualisation of sales metrics, busiest times of the day and week by transaction volumes
- Industry sales comparison tools, to compare performance against the wider industry
- A foreign exchange forecasting tool
- Customer insights through analysis of Commonwealth Bank card sales, giving insights into new vs repeat customers, sales per customer, average spending, number of visits and your typical customer gender, age and location.
The survey shows that businesses are mostly stressing about revenue, growth and competition. It also highlights how many aren't clear on how much they should be stressing or how they compare to the competition.
SMEs appreciate the value of big data, but might still be having trouble connecting it to concrete results. In a market that's crowded with expensive "business solutions," a free tool like Daily IQ might be a sensible place to start.
- Small businesses the losers in the quest for financial stability
- A better deal for small businesses proposed by ABA
- Canberra is turning out Australia’s healthiest small businesses
- Not a merry time for SME owners: 77% predicting no business growth for Christmas
- How businesses are funding their Amazon success