SMEs failing on innovation budget

Despite acknowledging the key role innovation plays in the modern economy, the vast majority of SMEs fail to dedicate funds to drive their own innovation.

Despite acknowledging the key role innovation plays in the modern economy, the vast majority of SMEs fail to dedicate funds to drive their own innovation.

MYOB’s latest SME Snapshot profile of more than 400 small and medium-sized enterprises, released today, showed that just 4 per cent of respondents invest a stipulated monetary amount into driving innovation in their businesses.

This is despite the fact that 85 per cent of business owners agree that developing new ideas is crucial to their ongoing success.

“We are seeing that Australian SMEs are struggling to invest in innovation,” said MYOB CEO Tim Reed.

“Australia needs its economic engine room firing on all cylinders, and having small and medium businesses invest more will go a long way to securing our prosperity.”

The good news, however, is that more business owners would be actively prepared to invest more in their business if the government provided them with additional capacity to do so.

According to the survey, 53 per cent would increase their business investment on the back of a cut in the company tax rate for small business, while 49 per cent said the same would be true if the GST and BAS were simplified.

“Knowing that […] business owners would use a cut in the company tax rate to invest more in their business is certainly encouraging,” Mr Reed said.

“It was encouraging to see the government lower the company tax rate to 28.5 per cent for businesses with an annual revenue of $2 million or under in last year’s budget. However, company tax affects businesses of all sizes.”

Mr Reed added: “The current system discourages SMEs to grow beyond $2 million in revenue because they then lose many of the benefits of being a small business. These barriers to growth need to be removed.”

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