The UK’s smallest companies could generate £77.3bn of extra revenue and create 885,000 new jobs if they “all digitalized at the rate of the top 20% of tech adopters.” This is according to new research from Xero, the global small business platform, and economics consultant, Cebr.
The research, from Xero‘s Beating the ‘digital drag’ report also found “that SMEs that had digitalized the most over the last four years grew their revenue by 8.1% over the same period, compared to the slowest adopters, who’d seen their revenues decline by 4.7%. Improving customer experience, smoother operations, and expanding their client base were cited as the top three benefits for adopting more tech.”
As part of the research, 684 of the UK’s smallest businesses – those with up to nine employees – were surveyed. Overall, these businesses “contribute £934.8bn to private sector turnover (15.3% of total UK turnover) and represent 94.8% of all UK companies.”
They provide more than “a quarter (8.9m) of the country’s jobs, and for every £1 they make, create an additional 59p for the wider economy.”
Despite this key economic role, many lag “behind larger small businesses when it comes to digitalization.”
In fact, the survey found “that on almost every measure, those with 10-249 employees have innovated faster than the UK’s smallest businesses.”
They use almost “twice as many digital tools – an average of eight technologies each, compared to 4.7 by the UK’s smallest businesses.”
And despite the pandemic driving many of them online “from early 2020, less than a third (30%) have increased their use of digital tools since 2019, compared to 69% of larger SMEs. 41% of the UK’s smallest businesses report using emerging technologies, such as AI and digital assistants, compared to 77% of larger SMEs.”
Without a clear understanding of “the benefits of digitalization, 40% of small businesses say they fail to see the relevance of new technologies to their company, with a similar number (39%) believing that adopting more tech wouldn’t deliver value for money.”
To help small businesses thrive and choose the right technologies for their organizations, Xero has the following recommendations:
- Set clear expectations: help staff embrace new technologies by tackling psychological and behavioral barriers. Part of this comes down to talking plans through so everyone knows what’s expected of them, and how the tech will help them do their jobs
- Prioritize the right tech: start with the options that will have the most impact. Think not just about what the tech can do, but how it will fit into company culture.
- Predict trouble spots: think about all the things that could go wrong. Advance planning can reveal any hidden threats and help avoid any teething problems.