In Treasurer Hockey’s budget last week, the federal government delivered small business owners a unique opportunity to position themselves for success. The lowest tax burden coupled with the lowest interest rates since the late 1960s means that Australian small businesses have not experienced such great conditions since the days of black and white TV.
What’s more, the new $20,000 tax deduction on every item purchased by small businesses with a turnover of less than $2 million presents an exciting opportunity for small businesses. Suddenly they have extra money to invest back into their business. Even more exciting is that this isn’t limited to just tangible expenses such as tools and machinery; it also extends to business software. While the budget item does not stipulate if business software includes subscription and cloud based solutions, we are making the assumption that it does – and should – given that this is how the majority of small businesses manage their CRM, ERP and accounting systems.
If used wisely, the $20,000 tax deduction represents a massive opportunity and step change in the way small businesses can invest in and leverage technology to drive success.
Having worked with many small businesses over the years, a key observation I’ve made is that small businesses are typically reluctant to invest in the right technology platform early on in their lifecycle. The first few months and even years are all about running lean, improving cash flow and acquiring new customers. During these initial periods, small businesses get by with free software and makeshift technology such as Excel spreadsheets. It’s only when these businesses start experiencing growing pains that they start looking for real technology solutions.
But consider these statistics:
- According to Forbes, 71 per cent of new business leads sourced from the internet are wasted;
- According to Harvard, 78 per cent of new business goes to the company which responds first to a customer enquiry;
- According to the MYOB 2015 Business Monitor, over the past 12 months cloud businesses outgrew those businesses using on-premise by 35 per cent.
These statistics highlight that the success or failure of a business depends entirely on its ability to attract and retain customers – and the speed at which it achieves that. The stats also highlight that more than ever small business owners need to grow their online customer relationship management (CRM) and marketing automation capabilities in order to compete with larger competitors. This investment is needed on day one not months or years down the track.
Perhaps some inspiration can be taken from the recent 2015 Crossroads Report from StartupAUS, which lists Australia’s top 10 ‘unicorns’ (a term used to describe tech startups that achieve significant scale before achieving a liquidity event (or exit) via IPO or acquisition with a market capitalisation of $1 billion or more). The common thread amongst these unicorns is their view of technology as an essential enabler for growth and success. Many of these startups made a deliberate investment in the right technology platform from the outset, and had a vision for their business and understood how technology would support that vision. As a result they have all leveraged technology to scale and grow at an exponential rate.
The gift of the $20,000 tax deduction now makes it easier for small businesses to make the right technology investment from the very beginning. Having the right platform will enable small businesses to identify, capture, nurture and win more leads. It will enable superior customer service to attract and retain customers. Finally, it will enable future growth and innovation.
It’s been a long time since small businesses in Australia have been given this level of support and focus. Like the Government, we encourage small businesses to go out there and ‘have a go’ – but our advice is to make this a smart and considered move by investing in the right technology platform, and investing early.
About the Author:
Written by Tom Karemacher, Regional Vice President, Mid-Market and SMB, Salesforce APAC.
