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SMBs firmly sold on Internet but who’s to nudge them onto Facebook?

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The Small Business Council of Australia may have jumped the gun in declaring that “small business is in crisis,” but make no mistake, Australian SMBs operate in a challenging environment. Insolvencies are at a 10-year high and consumer spending is falling.

But Australia’s small businesses are undaunted and see technology as the silver lining among the cloudy economic forecasts, according to a new report.

Melbourne IT sees growth in them their interwebs

According to a survey by Melbourne IT, Australian SMBs expect to make higher investments in technology over the next 12 months, as they anticipate an increasing higher share of revenues from ecommerce.

Over the next year, a majority of the 2,264 small- and medium-sized businesses polled planned to increase its investments on three key areas of modern commerce – website, internet marketing and computers and software.

“The innovation and apparent confidence we are seeing from Australia’s internet-savvy small business sector is encouraging,” said Damon Fieldgate, executive general manager of Melbourne IT’s SMB eBusiness Solutions division.

“It’s our view that the Internet is becoming the primary route to market for many businesses and small companies appear to be embracing new technologies and online initiatives to not only survive, but thrive.”

Following are the key findings of Melbourne IT’s eBiz Review:

  • 84% of eSMBs agreed or strongly agreed that the internet was vital to the operation of their business.
  • 59% of SMBs that already have websites plan to increase investment on internet tools
  • 54% expect to invest more on computers and technology
  • 54% will put in more dollars into marketing over the next 12 months

Few SMBs using ecommerce (eSMBs) plan to cut business spend:

  • eSMBs using social media for customer-facing operations have increased to 50%, from 34% a year ago
  • Still 76%, a vast majority, of SMBs using social media prefer to direct their customers to their company website instead of their Facebook page
  • Only 5% of eSMBs agree that group buying coupon sites offer sales or marketing benefits to their business

Yet Australia is lagging

In ecommerce, Australia is seen lagging U.S. and U.K. markets by three years. Consumer online spending is only 3% of overall sales, compared to 5% in Britain and the U.S.

Still, it is the country’s smaller businesses, not the larger ones, that have been doing the heavy lifting. Of over two million small businesses, 60% already have a web site and take orders on the Net, and over 75% accept internet payments, according to last year’s Sensis e-Business Report.

Last year, Australia’s ecommerce market was estimated at $27 billion, and is likely to rise nearly 37% to $36.8 billion by 2013, according to Forrester’s research.

Many analysts expect the surge to be led by mobile users – eBay, for example, has reported a mobile sale every 15 seconds.

Facebook, Twitter and Groupon beckon

The eBiz Review’s findings suggest that SMBs may have a couple of blind spots.

Namely, social media and group-buying, both of which share a synergistic relationship.

As Fieldgate points out, “social media can be a fabulous business tool for small businesses and those eSMBs who ignore it are missing an opportunity to engage with potential new customers.”

SMBs are shedding their social coyness and have made progress. Today, 89% have a Facebook page, though it is another matter that they still prefer users to visit their company websites.

At the same time, only 5% of the SMBs surveyed saw any value in group-buying.

“The reaction to group buying from eSMBs indicates caution,” said Fieldgate.

“While short-term promotions have their place, we would encourage small businesses to develop an integrated online marketing approach – including social media – to build long-term relationships with customers for long-term gain,” he added.

For the eBiz review, Melbourne IT Ltd. (ASX: MLB) surveyed 2,264 SMBs in Australia during June and July. Of them, 66% were business owners/partners; 10% IT/website managers; and 8% were general managers. The SMB respondents were drawn from 26 different industry sectors with no single sector comprising more than 9%. The SMBs polled had employees of up to over 100.

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