The high churn rate of Australian business - what's wrong?

By on
The high churn rate of Australian business - what's wrong?

If you're going to grow beyond 20 staff, you're going to need a management system that will take you there - and an IT plan.

One of the basic questions we often ask here at BIT when talking to small business, is how much IT has helped their bottom line. Often, they can’t answer specifically (or don’t want to).

I got thinking about this again today after reading this article. Tim Mazzarol identifies what he believes is a “missing middle” in Australia’s business sector.

His chief argument is that Australia may be a relatively good place to start a new business, but there is a high "churn rate". Of the businesses with employees that stop trading each year, 99.5 per cent are in “SME” category (though we note this is based on 2009-2010 data).

Australia’s small business sector is lauded as the engine room of our economy (or, as I heard one advocate put it the other day, "they are the economy"). But as Mazzarol points out, once they get beyond that 1-20 employee stage, it’s a new ball game requiring a new level of management. We recommend reading his article.

Anecdotally, this is something we hear echoed when it comes to IT. This article, while several years old, sums up the concern that many small businesses just don’t have an IT plan.

This is a worry when you consider the money being spent on IT by small business. For some, it’s minimal. For others it is significant. We spoke to a Sydney-based IT provider last week who said their customers might spend up to $60,000 a year or more to have their IT managed, plus another $20,000 on new hardware.

One of the dangers in not having an IT plan is picking IT based on the lowest price. Years after you’ve moved your payroll to a cloud system, when you decide you need a different product, getting your data out might become too much hard work.

When you consider the encouragement businesses are being given to jump into new technologies like cloud computing, it's all the more important that growing small businesses have an IT strategy. Look out for more articles about this on BIT.

Copyright © BIT (Business IT). All rights reserved.
Tags:

Most Read Articles

You must be a registered member of Business IT to post a comment.
| Register

Poll

How long has your business been operating?
Up to 2 years
2-5 years
5-10 years
More than 10 years
View poll archive

Log In

Username / Email:
Password:
  |  Forgot your password?