The $31.1 billion business burden holding back Australia’s economy
Small businesses are being held back by admin and regulatory requirements – and it's affecting our economy.
Small- to medium-sized businesses (SMEs) are spending effort and money to keep up with administrative and regulatory requirements, and it's affecting economies worldwide according to a new report.
The report from global accounting software provider Sage, Sweating the Small Stuff: the impact of the bureaucracy burden, found that administrative burdens varied considerably across the 11 countries it surveyed. However, on average it involved 120 man-days and US$50,000 per company.
Australian SMEs are losing 4.9% of their time dealing with administrative burdens which translates to an implied loss in productivity of AUD$31.8 billion to the Australian economy.
The report shows that Australia is a country of micro businesses, with over 80% of our SMEs being defined as "micro". Worryingly, this also means that Australia also has the second-highest cost of admin as a percentage of turnover.
Sage APAC marketing director, Elaine Seeto, said that this suggests "every dollar counts and every minute matters."
"Adhering to rules, regulations and red tape is the reality for small businesses in Australia. As we are all aware, Australia has one of the most complex employment and taxation laws, which increases the complexity of doing business in-country and abroad," she said.
"Australian small business owners often dedicate a significant portion of their time on administrative tasks, such as accounting, followed by operational admin tasks such as collecting and reporting on GST, invoicing, chasing and reconciling payments and processing payroll and payments."
She went on to say that smarter use of technology to drive automation and compliance can help to reduce this burden.
"Which the report found that at least 65% of businesses are not currently doing."
Australia had the highest percentage of SMEs not using any digital aids across their administrative tasks.
Seeto says this is due to a number of reasons including concerns about implementation costs or how time-consuming and complicated the process is.
"The reluctance may also be fueled by a perception of how secure Australian businesses feel in housing their personal and financial data online; a lack of time to properly investigate what the most effective options are for their business; and resistance to change due to the short-term impact on productivity before the longer term benefits from leveraging that technology software kicks in," she said.
"In other instances, we’ve also found that these smaller businesses simply just do not know where exactly to start this digital journey."
For businesses that are looking to save time and reduce their administrative burdens, Seeto says it's important to find the right digital solution for your business.
"Seek out your accountant for trusted advice, tap into your network for advice and recommendations and importantly take the time to research the various digital platforms to work out which solutions will be best for your business," she said.
"Take that first step towards digital adoption and automation – the business results will make the efforts extremely worthwhile."