Our digitally divided business community

New Zealand SMEs are missing out on revenue gains and growth in the economy is being constrained due to a clear divide in the use of internet-based technology, new research has found.

According to the latest MYOB Business Monitor Report 50% of local SMEs don't have their own online presence for their business. 24% have a website only, 9% have a social media site only and 14% have both a website and a social media site. However, the total proportion with a website is on the rise, now at 38% – up from 34% six months ago.

The use of cloud computing has also increased slightly in the last six months, with 18% of SMEs reporting they use the technology, compared to 16% in the February 2013 Monitor.

MYOB General Manager Business Division, James Scollay, says the difference between online businesses and those that don’t have a web presence is marked across a range of performance measures.

“What’s clear to us from our years of conducting research into SMEs’ use of digital technologies is that businesses with an online presence reach more people and become more engaged with their customers,” he says. “They also earn more, have more work in the pipeline, and are more likely to be hiring staff.”

“It’s evident that there’s a digital divide emerging in the New Zealand economy and we strongly believe it’s time for more local business owners and operators to take a closer look at what online tools could do for them.”

 

According to the survey, 38% of businesses with a website saw revenue increase in the 12 months to August 2013, compared to 26% of businesses without one. Over the next 12 months, more than half (52%) of businesses with a website expect to see revenue increase, compared to 37% of those without. The trend is even stronger for businesses with a website and a social media site – 63% forecast revenue growth in the coming year.

The growth expectations of online-savvy businesses are likely fuelled by their current workload. 44% of SMEs with a website and 47% of those with website and social media site reported increased sales or increased activity in the August to October period. Only 31% of SMEs with no website reported more pipeline work for the same period.

 

Buoyed by their performance, SMEs using Internet technology are more positive about the economy, with over a third (36%) expecting an improvement within 12 months, compared to 23% of businesses without a website. 

“Online businesses are more likely to be making a contribution to wider economic growth, including improved job opportunities for Kiwis,” says Scollay. “16% of businesses with a website and 22% with both a website and a social media site are planning to increase their full-time staff this year. That’s a considerably higher number than the 6% of businesses without a website who are looking to hire this year.”

 

“We also asked business owners and managers to identify the benefits they had seen by using online technology,” Scollay says.

“The areas they highlighted – such as it enabling them to earn and convert more leads – reinforces that being online is not just an indicator of good business management, but actually makes a significant contribution to the success of the operation.”

Scollay says the key barrier to more online participation is no longer cost or access to technology, but attitude.

“35% of those SME operators without a website said they didn’t see the value of a website, while another 23% felt it wasn’t a priority,” he says.

“We hope the kind of information we’re providing in this latest Monitor gives them motivation to take another look at the benefits of getting online. Businesses that are not online are clearly missing out on some significant advantages, from being more competitive to achieving higher revenue.

“Based on the results it’s clear there’s value for any business – in any sector– in establishing an online presence.”