New data confirms the impact lockdowns have had on small businesses in the building and construction sector and shows the need for measures to support increased digital uptake and capacity building to accelerate recovery from COVID lockdowns.
The data, released by MYOB in its Small Business Health Index shows lockdowns have immediate impacts for the building and construction sector. As of 22 October total invoice creation was down 31%, gross pay was down by 23% and employment was down by 16% compared to baseline.
Denita Wawn, CEO of Master Builders Australia said, “These insights are particularly important for our industry as we move forward out of lockdowns.”
This data highlights the impact that low levels of digitisation, particularly for SMEs have on businesses. Invoicing is down across the board, with in-person invoicing rendered impossible during lockdowns. Businesses with low levels of digitisation have been exposed as less resilient.
“COVID has been an accelerator of existing trends such as digitisation and has provided tangible evidence of how low levels of digital uptake hurts small business in our sector,” Denita Wawn said.
“As the Prime Minister highlighted prior to the Federal Budget, ‘one of the biggest challenges and opportunities turns on how we respond to the digital transformation’. We are working government on how they can support our industry to do so,” she said.
“MYOB modelling shows there are nearly 80,000 SMEs in the construction industry alone with no or very low levels of digitisation of their business processes. Businesses located in regional areas have less access to business and employee support services,” she said.
“We know that the greatest current challenge for SMEs in construction is managing cashflows given the stresses caused by supply disruptions, COVID delays and a mini housing boom which has meant SMEs have had to take on more work than usual. MYOB data shows that one of the greatest benefits of digitisation for SMEs is better cashflow management,” Denita Wawn said.
“Digitisation will help small building businesses to better manage their projects so they can more accurately factor in the costs of building products and specialist tradespeople into their quotes,” she said.
“Digitally advanced SMEs are 50% more likely to succeed in growing*. Supporting SMEs to become larger businesses will be increasingly important if the construction industry is to expand and address structural shortages in housing supply and infrastructure,” she said.
“With the construction industry home to more SMEs than any other industry, meaningful digital adoption will have perhaps the greatest impact in business recovery and improving business resilience,” Denita Wawn said.
*Deloitte Access Economics 2017.