Do You Know?

DO YOU
KNOW
The 16 Most Dangerous Facts
And National & Global Trends
That Every Small- and Medium-Sized Business
Owner, Manager & Stakeholder
In Australia Should Know About
© Businesses In HyperGrowth Pty Ltd. All rights reserved.

Contents
1. Snapshot: The State of Small- and Medium-Sized
Businesses in Australia (and the 16 Most Dangerous
Facts That Every Owner, Manager & Shareholder Should
Know About)
2. shifthappens: How the Shape of the World is Changing
3. World-Wide Alert: Global Trends for Small- and Medium-
Sized Businesses
4. The Threats and Opportunities for Small- and Medium-
Sized Businesses in Australia
5. Strategies for Australian Businesses to Seize the
Opportunities

1.Snapshot: The State of Small- and
Medium-Sized Businesses in
Australia (and the 16 Most
Dangerous Facts That Every
Owner, Manager & Shareholder
Should Know About)

#1: Business is risky …

If you started or were in business in 2008,
yours might have been one of the

1,194,317
Australian businesses
that had closed their doors by 2011.

Source: ABS, Cat. 8165.0, Counts Of Australian Businesses, Including Entries and Exits:
Jun 2007 – Jun 2011 (Canberra: C‟w of Aust., 2011), pages 11-12.

#2: New business is riskier …

If you had started a new
business in 2008, you had a

52% Source: ABS, Cat. 8165.0, Counts
likelihood of closing your Of Australian Businesses,
Including Entries and Exits:
Jun 2007 – Jun 2011 (Canberra:
doors by the end of 2011. C’w of Aust., 2011), page 5.

#3: Existing business is only a little
less risky …
Even if you had an existing business in 2008, you had a
40% likelihood of closing your doors by 2011.

Jun 2007 – Jun 2011 (Canberra: C‟w of Aust., 2011), page 5.

#4: (As at 2000) Around 40,000 businesses fail each
year with an estimated average loss of
$115,000.

#4: (As at 2000) Around 40,000 businesses fail each
year with an estimated average loss of
$115,000.
In 2000:
• It was also estimated that the
total cost of business failures is
$4.6 billion each year¹.
• The average Australian
mortgage was estimated at
$110,000 - $115,000².

• ¹ Source: W. Reynolds, W. Savage and A. Williams,
Your Own Business: A Practical Guide to Success
(Melbourne: ITP Thomas Nelson, 3/e 2000).
• ² Source: Dept. of the Australian Parliament Library:
Research Note No. 22, 2000-01 (Canberra: C‟w of
Aust., 2011), page 1.

#5: 29% of Australian businesses earn less
than $50,000 per year¹ (at least $18,000
below the average wage).

Average Wage: $68,725pa

$50,000pa

$0pa


#6: 34.5% of Australian businesses earn
between $50,000 and $200,000 per year.


#7: Only 1.1% of Australian businesses earn
over $1,000,000 per year.

#7: Only 1.1% of Australian businesses earn
over $1,000,000 per year.

Using the ABS Counts of Australian Businesses that reported 2,132,412
actively trading businesses in Australia as at June 2011¹ and the figures
available from Dun & Bradstreet’s Company360 database² from March,
2012, there are only 23,475 businesses with declared incomes in excess
of $1million per year.

¹ Source: ABS, Cat. 8165.0, Counts Of Australian Businesses, Including Entries and Exits:
Jun 2007 – Jun 2011 (Canberra: C’w of Aust., 2011), page 5.
² Source: Dun & Bradstreet’s Company360 database:
Australia's leading 50,000 private and public companies (www.company360.com.au).

#8: There’s not a lot of business growth happening:
From 2008-2011 only 4.9% of Australian businesses
grew staffing levels, and 5.6% went backwards.

Source: ABS, Cat. 8165.0, Counts Of
Australian Businesses, Including Entries
and Exits: Jun 2007 – Jun 2011
(Canberra: C‟w of Aust., 2011), page 8.

#9: 67.5% of business
owners earn less than
$1,000 per week.
Source: ABS, Cat 8175.0 - Counts of Australian Business Operators 2007-08
(Canberra: C‟w of Aust., 2009).

#10: Only 8.8% of business owners
earn over $2,000 per week.

Source: ABS, Cat 8175.0 - Counts of Australian Business Operators
2007-08 (Canberra: C‟w of Aust., 2009).

#11: Revenues for Small-Medium sized
businesses are shrinking at a greater rate
than Large businesses.

Source: Australian Chamber
of Commerce & Industry,
Small Business Survey –
February 2011.

#11: Revenues for Small-Medium sized
businesses are shrinking at a greater rate
than Large businesses.

… The
divergence
between small
and large
business sales
performance is
at its highest
level since 1996.

Source: Australian Chamber
of Commerce & Industry,
Small Business Survey –
February 2011.

#12: SME
business
owners are
deeply
pessimistic
about
Australia‟s
economy
improving.

Source: MYOB Business Monitor:
The Voice of Australian Business
Owners – October 2011.

#13:
Pessimism in
economic
recovery is
matched by
reports of
plummeting
business
revenue.

Source: MYOB Business Monitor:
The Voice of Australian Business
Owners – October 2011.

#14: Companies are increasingly behaving
like businesses in recession.

Christine Christian, Dun & Bradstreet (D&B) CEO,
in referring to the D&B December 2011 Survey,
reported that “companies, particularly in the
manufacturing and retail sectors, are increasingly
behaving like businesses in recession.”

Source: D&B website (dnb.com.au) 2012 including Christine Christian, D&B CEO, talks about
business expectations for the December quarter with ABC NewsRadio's Glen Bartholemew.

#14 (cont.): Companies are increasingly
behaving like businesses in recession.

The number of small business
collapses soared through 2011 …
… and this year could be another tough
one as poor sentiment outside of the
mining sector and tightened credit
conditions take their toll.



D&B's analysis of business start-ups and failures –
based on their own numbers and those of the
corporate regulator – found that

… the number of small businesses
going under lifted by 48% in 2011.



… This compares with a 42%
increase in insolvencies nationwide
across the year, D&B says.



Collapse among firms with fewer five
employees grew by 57% through the
year, whereas there was a 40%
increase for firms with between six
and 19 employees.



And collapse numbers rose by:

• 58% in service and construction,
• 66% in construction, and
• 28% in manufacturing.



Retail also had a shocking year,

with collapse numbers
up 11% for the December quarter

and 115% for the year.



And start-up numbers have gone through the
floor.

D&B says start-up numbers for firms with fewer than
five employees slumped 95% through 2011,

and there was a near 100% fall in start-up
numbers for the manufacturing, service and
finance sectors in the December quarter.



Christine Christian says there's an

"increasing risk
that the global economic slowdown
will intensify the
upward trend in insolvencies."



"Despite recent rate cuts, there is a palpable lack of
confidence in the current operating environment.

This is obviously one of the side effects of long standing
global uncertainty and can often be enough to deter
businesses from entering the market, irrespective of
actual conditions."



And start-up numbers have gone through the floor.

"Outside the mining sector, sentiment is generally still
poor and the strong Australian dollar is straining profits.

This could lead to an increase in
business failures
in 2012."


Christian says

“business failures have risen
by more than 30%
over the past three years”.


#15: Despite reports to the contrary,
Australia does have significant debt that is a
serious financial risk to the country.

Source: The Economist Magazine
website November, 2012 –
www.economist.com
/content/global_debt_clock

#15: Despite reports to the contrary,
Australia does have significant debt that is a
serious financial risk to the country.

Source: The Economist Magazine
website November 2012 –
www.economist.com
/content/global_debt_clock

#16: And if that’s not enough … on July 1
2012, Australia acquired the Carbon Tax and
the Mining Resources Rent Tax

No matter which side
of politics you may
support, these taxes
will impact
businesses in what
are already
challenging times.

DO YOU
KNOW

We live in challenging times.

We live in challenging times…

"We choose to go
...not because [it is] easy,
but because [it is] hard,
because that goal will serve
to measure and organize
the best of our energies and skills,
because that challenge is one
that we are willing to accept,
one we are unwilling to postpone,
and one which
we intend to win.”

– John F Kennedy

and challenge is best met head on with

capability

2.
: How the Shape of the World is Changing

The following slides are credited to Karl Fisch
@ http://thefischbowl.blogspot.com
(produced in 2009)

The preceding slides are credited to Karl Fisch
@ http://thefischbowl.blogspot.com

3.World-Wide Alert: Global Trends
for Small- and Medium-Sized
Businesses

Don't blink.

The future is rushing
straight at us.

A comparison between the dawn of the Internet
with the development and commercialisation of
electric power is appropriate.
(Nicholas Carr, The big switch: Rewiring the world,
from Edison to Google, New York: W.W. Norton & Company, 2009)

There are 2 billion Internet users worldwide
(Source: McKinsey Global Institute (MGI), Internet matters: The Net's sweeping impact on growth,
jobs and prosperity, May 2011)

800 million of them are active Facebook users
(Source: http://www.facebook.com/press/info.php?statistics, November 2012)

If Facebook and Twitter
were countries …

They’d rank 3
rd and 6th in the world’s most populous.

By 2016, there will be 3 billion Internet
users globally – almost half of the world's
population.

(Source: Boston Consulting Group, The Internet Economy in the G-20: The $4.2 Trillion Growth
Opportunity, March 2012. Note that the G-20 is the Group of 20 major economies which comprises
Argentina, Australia, Brazil, Canada, Chine, the EU, France, Germany, India, Indonesia, Italy, Japan,
Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the U.K., and the U.S.A.)

The Internet accounts for 3.4% of GDP in the
13 countries that McKinsey Global Institute
(MGI) looked at,

and 21% of GDP growth
in the last 5 years
in mature countries.

and there are 2.6 jobs created
for 1 job lost

75% of Internet impact in
terms of economic value
arises from companies
operating in traditional
industries (ie. not those that
exist only because of the
Internet, such as pure
e-commerce companies).

(Source: McKinsey Global Institute (MGI),
Internet matters: The Net's sweeping impact on
growth, jobs and prosperity, May 2011)

Small and medium businesses heavily using
Web technologies
grow twice as much as others

MGI found that the SMEs
with a strong web presence
grew more than twice as
quickly as those that had
minimal or no web presence.
In addition, the SMEs that
took advantage of the
Internet reported the share of
total revenues they earned
from exports was more than
twice as large as that
reported by others.
They also created twice the
number of jobs as others. (Source: McKinsey Global Institute (MGI), Internet matters: The Net's
sweeping impact on growth, jobs and prosperity, May 2011)

The Internet Creates Jobs
A detailed analysis of France over the past 15 years shows that
the Internet created 1.2million jobs and destroyed 500,000 jobs
creating a net 700,000 jobs or 2.4 (new) jobs for every one
destroyed. This result is reflected in our survey of more than
4,800 SMEs in the countries we studied which shows that 2.6
jobs were created for every one destroyed, confirming the
Internet's capacity for creating jobs across all sectors. Further,
companies that have fully integrated the technology and use it
extensively create more than twice as many jobs as the
average, while the Internet has a neutral to slightly negative
effect on companies using it sparingly or not at all.
(Source: McKinsey Global Institute (MGI), Internet matters: The Net's sweeping impact on growth, jobs and
prosperity, May 2011)

The Internet is Evolving at a Dramatic Rate Which is Also Accelerating

Note: Further analysis
this Exhibit is in the
following pages.

Source: Boston Consulting Group, The Internet Economy in the G-20 – The $4.2 Trillion Growth Opportunity, March 2012


The take-away:

The number of Internet users
in Developed markets will grow
by over 32% from 2005 to 2015.

The number of Internet users
in Developing markets will grow
by over 484% from 2005 to 2015.



The take-away:

The number of fixed broadband
users will grow by over 243%
from 2005 to 2015.

The number of mobile broadband
users will grow from a very small
number in 2005 to 2,134,000,000
in 2015, the percentage growth of
which will be a very large number
… at least 2,134,000,000%.



The take-away:

The amount of data transferred
Around the Internet will grow
3,120% from 30 exabytes (that‟s
30,000,000,000 gigabytes) to
966 exabytes from 2005 to 2015.


In the Developing World, Many Businesses are Going "Straight to Social (Media)"

In the 1990s and early 2000s, most business use of the Internet (other than email) was
around individual websites that provided company, product and service information, etc.,
much of which was static other than the eCommerce systems that many set up to manage
online sales. Many Australian businesses established their websites during this period.
In the late 1990s Web version 2.0 came into being.
A Web 2.0 site may allow users to interact and collaborate with each other in a social media
dialogue as creators of user-generated content in a virtual community, in contrast to websites
where people are limited to the passive viewing of content. Examples of Web 2.0 include
social networking sites, blogs, wikis, video sharing sites, hosted services, web applications,
mashups and folksonomies.
Businesses that “go straight to social (media)” are those that went straight to Web 2.0 with an
emphasis on social media (ie. Facebook, Twitter, MySpace, etc.), effectively bypassing the
“traditional” approach that started in the 1990‟s.

In the Developing World, Many Businesses are Going "Straight to Social (Media)"


The Internet‟s Contribution To GDP is Significant & Growing ($trillions)

Australia‟s Internet economy in
2010 was valued at $1.2trillion,
representing 3.3% of GDP.


The Internet‟s Projected Contribution To GDP For 2016 ($billions)

Australia‟s Internet economy in 2016
is projected to be worth $1.2trillion,
representing 3.7% of GDP.


Projections For Online Retail By 2016 (% of Total Retail Purchases)

Australia‟s online retail sales
are projected to be 8.9% of
total retail sales by 2016 – the
3rd highest of the G-20 group.


The ROPO Affect
Products and services
researched online and
purchased offline (ROPO)
represented 7.8% of
consumer spending in 2010.

ROPO is a bigger factor in
developed economies.

Mobile shopping – using a smartphone
to identify deals, compare products and
prices and "seal the deal" while on the
go – is growing in popularity worldwide.

Source: Boston Consulting Group, The Internet Economy in
the G-20 – The $4.2 Trillion Growth Opportunity, March 2012

ROPO Greatly Amplifies the Internet‟s Impact on Retail ($billions)

Australia‟s online retail
expenditure was $20billion in
2010, but another $38billion
was spent on research-online,
purchase-offline purchases.


ROPO Greatly Amplifies the
Internet's Impact on Retail

Retailers of all stripes face an
especially fast-changing and
increasingly competitive environment
in the years ahead.

With the rapid growth of eCommerce
and its potential to disrupt both the
top and bottom lines, retail may be
ripe for a transformation similar to the
one seen in media.

A multichannel offering that
captures sales wherever they
occur will become a "must have"
for most businesses.

Source: Boston Consulting Group, The Internet Economy in
the G-20 – The $4.2 Trillion Growth Opportunity, March 2012

Smartphones are Changing
the Business Landscape
Smartphones have become an indispensable
part of our daily lives. Smartphone penetration
has risen to 52% of the population and these
smartphone owners are becoming increasingly
reliant on their devices. 58% access the Internet
every day on their smartphone and most never
leave home without it.

Implication: Businesses that
make mobile a central part of
their strategy will benefit from
the opportunity to engage the
new constantly connected
consumer.

Source: Google, Our Mobile Planet: Australia – Understanding the Mobile Consumer , May 2012

Smartphones are
Changing the Business
Landscape
Smartphones have transformed
consumer behaviour. Mobile search,
video, app usage and social
networking are prolific. Smartphone users
are multi-tasking their media with 80%
using their phone while doing other things
such as watching TV (48%).

Implication: Extending advertising
strategies to include mobile and
developing integrated cross-media
campaigns can more effectively reach
today‟s consumers.

Source: Google, Our Mobile Planet: Australia –
Understanding the Mobile Consumer , May 2012

Smartphones are Changing
the Business Landscape

Smartphones help users navigate the world. Appearing on smartphones is critical for local
businesses. 86% of smartphone users look for local information on their phone and 88% take
action a result, such as making a purchase or contacting the business.

Implication: Ensuring that clickable phone numbers appear in local results and leveraging
location-based services on mobile make it easy for consumers to connect directly with
businesses.


Smartphones are
Changing the Business
Landscape

Smartphones have changed the way
that consumers shop. Smartphones
are critical shopping tools with 94%
having researched a product or service
on their device. Smartphone research
influences buyer decisions and
purchases across channels. 28% of
smartphone users have made a
purchase on their phone.

Implication: Having a mobile
optimised site is critical and a cross-
channel strategy is needed to engage
consumers across the multiple paths to
purchase.

Source: Google, Our Mobile Planet: Australia –
Understanding the Mobile Consumer , May 2012

Smartphones are Changing the Business Landscape

Smartphones help advertisers connect with consumers. Mobile ads are noticed by 87%
of smartphone users. Smartphones are also a critical component of traditional advertising as
63% have performed a search on their smartphone after seeing an offline ad.

Implication: Making mobile ads a part of an integrated marketing strategy can drive greater
consumer engagement.


Online advertising, a $65billion
business in the G-20 in 2010, is
forecast to grow 12 percent a year to
almost $125billion in 2016.

In countries with more developed
Internet economies (such as Australia),
15 to 30 percent of advertising
spending has migrated online.

Online spending in
the U.K. overtook
spending on
television
advertising in 2011
– and it now
exceeds
spending on all
other media Source: Boston Consulting Group, The
categories. Internet Economy in the G-20 – The $4.2
Trillion Growth Opportunity, March 2012

The Internet is having a big impact
on how enterprises do business
and interact with one another, too.
Cloud-based data storage,
integrated procurements systems,
and "enterprise social networks
(such as Yammer)" that facilitate
communication within and
amongst organisations in real time
are helping companies address a
host of procurement, coordination,
communication, and fragmentation
issues.

The Youngest and Oldest Consumers Tend to Value the Internet the Most


Five Value Levers
We've identified five value levers that explain the
Internet advantage of High-Web SMEs (companies
that use a wide range of Internet tools to market, sell,
and support customers, interact with suppliers, and
empower employees):
• Geographic Expansion.
• Enhanced Marketing.
• Improved Customer Interactions.
• Leveraging the Cloud.
• Easier and Quicker Staff Recruitment.
[Note:
• High-Web businesses use a wide range of Internet tools to
market, sell, and support customers, interact with suppliers, and
empower employees.
• Medium-Web businesses market or sell goods or services online. (Source: McKinsey Global Institute (MGI),
• Low-Web businesses have a website or social networking site. Internet matters: The Net's sweeping
impact on growth, jobs and prosperity, May
• No-Web businesses do not have a website.] 2011)

Five Value Levers
• Geographic Expansion. The Internet creates a borderless world for many
SMEs, enabling them to compete with much larger, multinational companies
by accessing markets that were previously out of reach.
• Enhanced Marketing. Online marketing delivers expanded reach and
measurable returns. It also yields valuable data about consumers and their
preferences, enabling expressly targetted advertising and offers.
• Improved Customer Interactions. Social media makes it possible for
companies to engage in a real-time dialog with customers not only to boost
sales but also to build loyalty and even to help create, refine, and enhance
products and services.
• Leveraging the Cloud. SMEs can access sophisticated, often cloud-based,
tools to enhance a wide range of functions, including customer relationship
management, information management, and customer payments. As a result,
these companies can grow quickly without requiring large investments in
infrastructure.
• Easier and Quicker Staff Recruitment. The recruiting options available
today are more powerful and less expensive that ever before, and they enable
SMEs to tap a global talent market.


(High-Web) SMEs That Make Extensive Use of the Web Grow Faster

These figures represent the variation in sales growth between
High-Web businesses and their Low- & No-Web competitors.


The Internet will change even
more in the next five years
than it has in its first twenty-
five. It will have more users,
more mobile users, more
users using various devices
throughout the day, and many
more people engaged in an
increasingly participatory
medium.


Businesses in particular
need to make a choice. They
can rise to the challenge of a
new Internet-driven
marketplace – and benefit
from the expanded
capabilities and higher
growth rates that the High-
Web SMEs are already
achieving throughout the G-
20 nations. The alternative is
following in the footsteps of
such industries as music and
publishing, which held on to
outdated business models
for too long and are now
dealing with competitive
environments that have been
reshaped around them.


For those willing to think
big, embrace change,
move quickly, and
organise differently, there
are countless
opportunities to reap the
rewards of the Internet's
creative destruction in
industries ranging from
health care to retail and
consumer goods.


In Summary …
• By 2016 approximately half of the world‟s population will be
using the Internet.
• The percentage contribution of Internet-based commerce might
still be low, but 21% of GDP growth in mature (developed)
countries in the past five years has been Internet based.
• Small- and medium-sized businesses heavily using Web
technologies grow twice as much as others.
• Social media/networking and mobile devices are key drivers of
Internet-based business growth.
• The research-online, purchase-offline sales, when added to
online sales represented almost 12% of total retail sales in
Australia in 2010.
• The Internet is becoming such a powerful advertising medium
that it is overtaking television in terms of expenditure.
• Don’t blink … the future is rushing straight at us.

4.The Threats and Opportunities for
Small- and Medium-Sized
Businesses in Australia

Australia‟s Internet Economy: Set To Grow by $20billion by 2016


The Internet‟s Impact on Commerce in Australia: Growth Projections for 2016

Key take-away: Australia‟s online retail sales
will be 8.9% of total retail sales by 2016.


96 percent of SMEs report that they were online and use the
Internet in the following ways (and the percentage that do so):

To communicate via email 96%
To look for information about products and services 91%
Internet banking 91%
To look for suppliers of products or services 88%
To get reference information or research data 86%
To access directories such as the Yellow Pages 82%
To pay for products and services 80%
To place orders for products and services 79%
To access and use online catalogues 76%
To receive payments for products and services 75%
To use a website to advertise or promote your business 67%
To take orders for products and services 62%
To streamline communications with customers and staff 61%
To monitor your markets or the competition 44%
To promote the business using e-mail marketing 31%
To advertise your business on other websites 21%
To use online auction sites to sell goods or services 21%

Source: Sensis, The Online Experience of Small and Medium Enterprises - November, 2011

The Product Share of Online Retail Sales in Australia

Australian SMEs taking orders for goods and services online,
by industry sector, April 2011

While 96% of SMEs
reported that they were
online,
only 16%
of those reported that
they had some form of
strategy for their
businesses digital
activities.
For most SMEs that did have a digital
business strategy, it was most likely to
be focused on internet and websites
(90 and 89 per cent respectively), with
54 per cent including a mobile
component and 53 per cent including a
social media component.

Source: Sensis, The Online Experience of Small
and Medium Enterprises, November, 2011

With only 15% of all SME businesses in Australia operating with a digital
business strategy, it leaves 85% of SME businesses in Australia to being
Medium-Web (at best), Low-Web or No-Web users …

… meaning that most
(85% of) SME
businesses in Australia
are standing still or
going backwards in
relation to their High-
Web competitors.

 High-Web businesses use a wide range of Internet tools to market, sell, and support customers,
interact with suppliers, and empower employees.
 Medium-Web businesses market or sell goods or services online.
 Low-Web businesses have a website or social networking site.
 No-Web businesses do not have a website.
(Source: McKinsey Global Institute (MGI), Internet matters:
The Net's sweeping impact on growth, jobs and prosperity, May 2011)

The Boston Consulting Group’s Report (The Internet Economy in the G-20 – The
$4.2 Trillion Growth Opportunity) In Regards To Australia and its Internet Economy

BCG estimates the size of the Australian internet economy at $44 billion, or 3.3 per cent of GDP,
and says it is expected to grow at an annual rate of seven per cent to reach $67 billion, or 3.7 per
cent of GDP by 2016. About half of that $67 billion will relate to consumption.

It also says, however, that the trend towards retail buying offshore – the source of fierce
complaints and lobbying by physical retailers – was a major factor in measuring the size of the
internet economy here. With imports deducted from the value of the internet economy, the size of
the economy was diminished by one percentage point.

„‟It highlights the missed opportunity for Australian retailers,‟‟ the report said. It also said the
actual influence of the internet on retailing was larger than the value of online purchases because
consumers had spent about $44 billion offline in 2010 after researching their purchases online.

The significance of retail to the growth of the internet economy can be seen in BCG‟s estimate
that the sector accounts for about one third of the G20 GDP and its forecast, for instance, that
online retail will represent up to 23 per cent of total UK retail sales in 2016.

It sees mobile shopping, using smartphones and other portable devices, as having a dramatic
impact on retail commerce and e-commerce generally and says retail may be "ripe" for a
transformation similar to that experienced by the media industry, where, in developed economies,
between 15 per cent and 30 per cent of advertising spending has migrated online. It forecasts
online advertising, a $US65 billion business in 2010, to grow at 12 per cent per annum in G20
economies through to 2016, to about $US125 billion. Page 1/3


In Australia it expects online advertising to grow from 18.4 per cent of total advertising spending
in 2010 to 34 per cent in 2016, making it the largest advertising medium.

The other significant conclusion from the report is the opportunity it outlines for small and
medium-sized enterprises. In 11 of the G20 countries, "high web" SMEs have experienced
revenue growth that was up to 22 per cent higher than that achieved by SMEs with no or low web
usage, BCG said. In the UK, sales at high-web companies increased six times as fast as those of
firms with no internet presence.

In this economy the exponential take-up of smartphones and tablet devices does tend to indicate
the potential for a structural shift upwards in e-commerce generally and e-retailing in particular.
As the national broadband network rolls out (whichever version of it we ultimately end up with)
there ought to be another surge in broadband penetration and usage.

While, in terms of its cost, the NBN is consumer-centric because so much of its cost is tied up in
connecting homes to the network, the big economic opportunity, if they can seize it, lies in the
potential for businesses, particularly small businesses, to extend their reach and change the very
nature of their businesses.

Similarly, as Telstra, Optus and Vodafone roll out their 4G networks, there is a massive
opportunity for internet-savvy businesses to target and reach a bigger market more efficiently and
effectively by leveraging off the smart dimensions of the new generation of mobile devices.
Page 2/3


BCG says that mobile devices will account for four out of five broadband connections by 2016.

The mobile internet no doubt helps explain the explosion in usage of social networks, particularly
in developing economies, which already have more than 800 million users. BCG says social
networks reach more than 80 per cent of consumers in developed and developing economies
alike.

After a slow start Australian retailers and businesses more broadly are making an effort to
develop meaningful online presences. Whether they aim to capture online sales or the offline
sales shaped by online research, the kinds of growth rates BCG is describing, within the
timeframe it was considering, means the laggards are likely to be punished severely.

One only has to look at what has happened to the media sector, as its revenue has shifted to the
internet at an accelerating rate, to see how disruptive and destructive the internet can be to
traditional business models and how difficult it is for those models to profitably compete with
competitors that have been designed for the internet once the competitors are established.

For the traditional retailers and other businesses with consumer interfaces they either embrace
the net or become increasingly irrelevant and threatened.

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In Summary …
• Australia‟s online retail expenditure was $20billion in 2010, but another
$38billion was spent on research-online, purchase-offline purchases.
• Australia‟s online retail sales are projected to be 8.9% of total retail
sales by 2016. Extrapolating the 2010 figures for research-online,
purchase-offline sales to 12% in 2016, the result of online-based sales
with therefore exceed 20% by 2016.
• With only 15% of all SME businesses in Australia operating without a
digital business strategy, it leaves 85% of SME businesses in Australia
to being Medium-Web (at best), Low-Web or No-Web users …
meaning that most (85% of) SME businesses in Australia are standing
still or going backwards in relation to their High-Web competitors.
• After a slow start Australian retailers and businesses more broadly are
making an effort to develop meaningful online presences. Whether
they aim to capture online sales or the offline sales shaped by online
research, the kinds of growth rates BCG is describing, within the
timeframe it was considering, means the laggards are likely to be
punished severely.

5. Strategies for Australian Businesses
to Seize the Opportunities

High-Web businesses
typically have a Digital
Business Strategy
incorporating:
• Website(s) with compelling
content for the market(s)
served.
• Online marketing.
• Social media.
• Online payments system(s).
• Productivity-based system(s)
that support growth &
scalability.
• Provisioning for privacy and
security.

Attributes of Effective Digital Business Strategies

Being able to be found.

No matter how advanced
your products or services
may be, and no matter how
effectively your website might
describe those products and
services, if people can‟t find
you amongst the ads and
search engine results, you‟re
losing business.

Being found could be the results of pay-per-click ads, results from
search engineers, links from social networking sites, links from affiliate
sites, or indeed, via offline activities, your business needs to be found
in order to attract visitors.

Attributes of
Effective Digital
Business
Strategies

Once you‟ve been
found, make sure
that your site can be
viewed optimally on
the visitor’s device.

Attributes of Effective
Digital Business Strategies
When visitors arrive at
your published article,
your discussion
contribution, your blog,
your website, etc.,
they‟ll skip over you if
your content isn‟t Providing
interesting or reasons for
compelling, or if your
website can‟t be easily
visitors to stay a
read or navigated, or while.
they assess for any
number of reasons that
you can‟t help them,
they‟ll abandon you in a
heartbeat and move
on. You must provide
reasons for them to
stay a while.

Provide them with reasons
to keep coming back…

again, again, and again …


Give reasons for people to undertake the action you want
them to take.

Whether it is to have
them submit their
details, or respond
to your article, or
undertake your trial
offer, or to buy your
product or service,
provide them with
compelling reasons
to do so (and it the
time that you want
time to do it in).


And when they take the
action you want them to
take, make it easy for
them.

And after they‟ve taken the action,
thank them and give them
reasons to come back again, and
again, and again …


Make follow-up a standard business process, especially
if you want repeat business, or referrals, or endorsements,
or testimonials, or case study subjects …


One system solution to run the
whole business.

This means never having to enter the
same information twice.

This eliminates the obstacles with
juggling multiple systems, re-keying
information, manually importing and
exporting data between separate
applications, and toggling between
systems trying to determine what‟s
going on in the business.


Key benefits on the one system solution
include:
• Gain real-time visibility and business
intelligence.
• Design a fully featured, database-driven
website.
• Boost conversion rates and increase
revenue.
• Operate a multi-channel business.
• Manage inventory in real time.
• Increase employee productivity.
• Improve customer satisfaction and
retention.
• Conduct ecommerce around the globe.

Unified sales channels
providing the ability to centralise
all customer, product and Regardless of which channel
transaction data across different the customer interacts with,
channel – online, mobile, social, their transactions and
retail stores and call centres. interactions are all stored in
Customers can shop from any one place, allowing you to
channel, or even use multiple provide better service, cross-
channel – by ordering online channel loyalty point
and picking up or returning in a programs, and pick-up or
store, for example. return through any channel.

You can make the same The system tracks inventory
products available in all across channels, allowing
channels, or choose to feature you to display real-time
different products in different inventory availability to your
channels depending on the shoppers by store or
customer segment you‟re channel.
targeting with each channel. Selling a product through
one channel can
automatically reduce the
inventory available for other
channels.

Intelligent merchandising. The system allows you to feature products on any
channel in various ways, so that you can display the right products to the right
shoppers at the right time. For example, you can display products based on best
sellers, best margins, best ranked, or most overstocked, and publish them to
shoppers based on their location or purchase history. It also lets you automatically
and dynamically merchandise associated products based on what shoppers bought,
so you can provide “People who purchased this product, also purchased”
recommendations.
Integrated, closed-loop marketing. The system lets you run multiple types of
marketing campaign – including email campaigns, paid search campaigns, affiliate
marketing or direct mail marketing – and automatically track their lifetime revenue
and profitability. Full closed-loop tracking allows you to measure the success rate of
each marketing campaign in real-time, and see the cost and profit for each sale and
campaign. And by tying the campaign to your customer through all their future
interactions with your company across channels, you can measure the lifetime value
of the campaign and focus your marketing dollars on the campaigns that provide the
best results.

Improve customer service and satisfaction.
The system gives you a complete 360-
degree view of each customer. You can
see, in one place, every interaction
shoppers have had with your company,
including their lifetime purchase
histories, website activities, responses
to your marketing campaigns,
communications with your company,
and much more. You can use this
information to provide better service –
quickly and accurately answering their
questions. You can also use this
information to segment and target them
with marketing campaigns, and to
merchandise different products to them.
Your sales team can sell more
effectively by understanding what
products customers viewed on your
website, and by providing product
recommendations that the system
automatically presents based on similar
shoppers‟ purchase history.

Increase accuracy and efficiency.
Businesses of the system may report major
cost savings and efficiencies in managing
their operations. According to a recent
Nucleus Research report, companies using
modern cloud-based ERP systems for
ecommerce experience on average 20%
employee productivity gains, 50% reduction
in time spent on accounting functions, and
80% lower development costs. Because
these systems automate more of your
business and manages everything in real
time, it eliminates the errors that are
unavoidable when juggling multiple
separate systems. Now you, your
customers, your suppliers and your
partners always know exactly what‟s
happening with every order. Automated
processes and better accuracy means
faster orders, more satisfied customers and
lower operational costs.

Increased visibility for better decision making. Customisable dashboards give
you unprecedented visibility across your entire organization, and unified customer
records allow you to see every interaction a customer has had with your company.
The dashboards provide real-time access to key performance metrics, and
support intelligent, timely business decisions. In addition, full visibility into unified
customer records allows you to see all of a customer‟s transactions, interactions
and even which items they‟ve placed in your shopping car – allowing you to easily
segment your customers and merchandise to them based on any of this
information.

Shopping and Merchandising Tools. Web capabilities should include
easy-to-use site building tools, secure shopping cart functionality,
integrated real-time credit card processing with Payment Card Industry
Data Security Standards compliance and multi-level fraud protection,
coupons, gift certificates, cross-selling and more. The system should
provide all the functionality you need to give your online retail business a
high-end web presence that‟s easy to manage and maintain.

Self-Service Capabilities. Websites should come with a customer self-service
centre, where shoppers can track their packages, review their purchase
histories, manage returns, view responses you’ve given to their questions,
update account information, re-purchase individual products or entire orders,
download digital goods, review and approve quotes, pay bills, and more. All of
this information is available to your shoppers 24/7.

Integrated, Real-Time Inventory Management. Your site will show real-time
inventory availability updated based on actual inventory. You can display the
inventory amounts to your shoppers and even tell them how much is available in
each physical location. You choose whether to automatically remove out-of-stock
products from your website or keep selling them. The system‟s procurement
capabilities can automatically recommend, based on your sales history, when
you should re-order items, and what the preferred stock level and lead time
should be, even for seasonal items.

This level of accuracy in real-time
inventory availability allows you to reduce
the number of back orders and customer
disappointments, as well as reduce the
buffer stock you need to ensure that back
orders don‟t happen. Reducing back
orders increases customer satisfaction
and loyalty; reducing buffer stock
reduces the inventory on hand and the
turnover rates for your products.


Seamless Order Management and
Fulfillment. The system should provide an
order management workflow that can be
customised to match your company‟s
businesses processes. This allows efficient
operations to fulfill your orders, and allows
you to scale and handle more orders with
the same fulfillment team. The workflow can
include a separate order approval process
that reviews by exception, only red flagging
orders that meet pre-defined criteria.

Fulfillment can be split up into separate pick, pack and ship steps. Seamless
integration with UPS, FedEx, USPS and others allows you to generate real-time
pricing, print shipping labels, generate customs documentation, and automatically
send out tracking numbers – all from within the system.

Intelligent Sales & Marketing Optimisation via:
• Affiliate Management. You can track all of the
leads and sales coming from your affiliates, report
on every sale, automatically calculate
commissions, and provide your affiliates
password-protected access to this information.
This allows you to easily have an affiliate
marketing program and increase your sales.
• Pricing and Promotions. The system should
allow you to set different pricing levels for the
same item for different customers, or offer
channels or volume discounts. You can also set
up different promotions to encourage sales of
specific items or group of items. This flexibility in
pricing and promotions allows you to use pricing
as a way to provide value to different customer
segments.

An Effective Digital Strategy, Well Implemented, Will Help You Grow Faster


Conclusions …
• Whilst there will be exceptions, small- and medium-sized businesses in
Australia are doing it tough.
• The Internet is accelerating in its ability to change business landscapes
and is therefore both a threat and an opportunity for businesses around
the world:
• A threat to those that don‟t fully adopt its use (85% of SME businesses in
Australia).
• An opportunity to those that do (15% of SME businesses in Australia).

• After a slow start Australian retailers and businesses more broadly are
making an effort to develop meaningful online presences. Whether they
aim to capture online sales or the offline sales shaped by online research,
the kinds of growth rates BCG is describing, within the timeframe it was
considering, means the laggards are likely to be punished severely.
• For businesses that choose to fully exploit the opportunities available with
the Internet, the path has already been travelled by many and the keys to
success are well known. Central to that success is the development and
implementation of an effective digital business strategy.

NOW YOU
KNOW
The 16 Most Dangerous Facts
And National & Global Trends
That Every Small- and Medium-Sized Business
Owner, Manager & Stakeholder
In Australia Should Know About

NOW YOU
KNOW
This report was produced as a collaborative project by:
• Businesses In HyperGrowth Pty Ltd
• HyperGrowth Technologies Pty Ltd, and
• KwikWeb Pty Ltd


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