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Almost half of small businesses predict complete shift to online operations

Digital trends are causing a fundamental shift to how business is done and according to the latest American Express Shop Small survey, 46 per cent of small business owners predict online will account for at least half of their sales within three years.

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Further, almost half of bricks and mortar small business owners (48 per cent) predict their business will operate entirely online in the future, of which 26 per cent foresee this happening in the next three years.

Two-thirds of consumers believe small business need to go online to survive, while 57 per cent say these smaller companies can’t compete with the delivery speed and other customer services offered by big business, the survey found.

As for current performance of small business, the proportion of business owners who rated their overall success as ‘extremely good’ was down from 11 per cent to 7 per cent, only 34 per cent said revenue had increased in the past financial year and 12 per cent indicated that revenue had decreased.

Economic conditions are weighing heavily on small business confidence but keeping up with technology is the fastest growing concern – from 27 per cent last year to 41 per cent this year. Those highly concerned about attracting new customers was up slightly to 44 per cent and the economy is the biggest worry for small business owners with 50 per cent describing it as ‘highly concerning’.

The survey also revealed that one-third say their business is at moderate to high risk of becoming insolvent in the next three to five years – particularly for those in operation for less than two years (46 per cent), those in the food and beverage industry (40 per cent) and those operating entirely online (37 per cent).

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When it comes to forward planning, the most popular growth strategy is increased marketing investment (25 per cent), followed by greater use of social media (20 per cent), launching or changing products (12 per cent), longer trading hours (12 per cent) and hiring staff with new or deeper skills (11 per cent).

Those looking towards future innovation point to investment in the latest technology (40 per cent), training (35 per cent) and initiatives designed to reward staff (34 per cent).