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Digitisation dramatically improves business for UK SMEs

Turner Little - UK SMEs digital

Small and medium sized businesses (SMEs) have flexibility, agility and responsiveness on their side in the battle against large companies. The ability to pivot and react to changes in your sector is invaluable when it comes to maintaining success and growing your business.


And SMEs that embrace and work with flexible, fast, digital infrastructure are ahead of the competitive game. A worldwide survey of SMEs by Techaisle and Salesforce finds a ‘digital divide’ within this sector. Those companies capitalising on the speed and cost advantages of cloud computing have an advantage over their contemporaries.


Digitisation improves business for UK SMEs


The annual Business Digital Index (BDI) from Lloyds Bank has been running since 2014. In those five years, encouraging results are now showing. The latest report shows that digital uptake for SMEs is currently at an all time high with 99% of small businesses and charities in the UK now online.


The digitisation of UK charities has just about doubled since 2014’s index. The score increased by 92% in the 2018 report for charities, and by 24% for SMEs. This means that, when compared with data from 2014, there are now 81% fewer charities showing the lowest digital capability. There are 50% fewer SMEs showing this too.


Lloyds say that this change results from a change in mindset. This is borne out by 71% of SMEs saying that they recognise that digitisation is vital for their future success. This is an increase of 31% over the last five years. Almost one million SMEs and charities show four of the five measurable Basic Digital Skills in the Index. This is an increase of 34% over just 12 months.


Still work to be done to close digital gap


All of these stats are encouraging, but there is still much to be done. There is a productivity gap of £85 billion that can be narrowed significantly by boosting digitisation.


The Index shows 16% of UK SMEs scoring low digital capability. This is the equivalent of 655,000 small businesses, and the impact this has on the economy as a whole is significant. Using behavioural and transactional data, the BDI shows that if these SMEs close the digital divide, they could unlock an extra £84.5 billion in turnover.


Sole traders have the biggest opportunity to capitalise on digital skills. Just over 41% measure as low digital capability. If they develop and enhance their digital capability, then they could see an extra £24,000 turnover per year each. And if every sole trader does this, there would be an increased turnover for SMEs in the UK of £43.3 billion.


Recognising the benefits of digital transformation

Businesses often don’t understand the value of their current digitisation, or the benefits of improving it. The Index shows that 64% of SMEs don’t link increased sales with their online activity. However, they are incorrect as data shows digitisation has improved sales for this sector by up to 25%. The study shows there is a clear correlation between using Cloud based tech services and increased turnover.


Accessibility is another key area that small businesses are failing to capitalise on. More than 10 million people in the UK are registered as having a disability. However, 96% of UK SME websites do not reach the international accessibility guidelines (WCAG).


Research also shows that around 25 million people choose to shop on their mobile device. Despite this number, just 18% of SMEs in the UK have optimised their website for mobile use.


James Turner, Managing Director of Turner Little Limited, says: “The latest Index has a mix of positive and negative results from the small business sector in the UK. It’s encouraging to see the increase in numbers of SMEs that are now digitised and showing real engagement with the benefits of technology.


“However, it’s clear that there is a significant digitisation gap in this country. There is the opportunity for small businesses to vastly improve their prospects, turnover and bottom line if they choose to utilise the technology available.


“There is likely a generational impact on these figures, with sole traders in particular affecting the uptake of Cloud-based services. Those who have been working for years in a certain way may simply not understand the opportunity available to them. As tech becomes more intuitive and easier to use, I would hope to see these figures improve by the time of the next Index.”

About Turner Little
Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider. Our services include company formation, UK and offshore banking, asset protection, credit correction, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.

Turner Little and its affiliates do not provide tax, legal or accounting advice. Material on this page has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.