Most small businesses that use digital tools credit them with improved business performance. These are the findings of a new study form Deloitte, which surveyed 1,000 small and medium sized businesses (SMBs) to find out how they use technology.
The results clearly indicate that SMBs that empower themselves through judicious use of tech are more successful. Digitally empowered small businesses go on to achieve higher employment growth and improved financial results.
Why does digital tech lead to improved business performance?
Out of the respondents, 99% say they use digital technology every day. However, while just 1% don’t use any digital tech, the tools used by the majority vary hugely in sophistication.
The SMBs surveyed are divided into four categories, covering where they see themselves on their digital business journey:
- Advanced users: 19%.
- High users: 17%.
- Intermediate users: 41%.
- Basic users: 23%.
The results show a link between the level of digitisation a company utilises, and its overall business performance.
Digital tech users much more likely to gain new customers
Businesses that use an advanced level of digital technology are around five times more likely to interact with new customers from all around the world, than less tech savvy companies.
And, given that exporting goods is a huge percentage of the work done by the small business sector in the UK, there is clearly a need to understand digital technology. Using digital tools can help SMBs remain competitive in the vast global economy. This is particularly relevant for small business that rely on exporting and important products and services as the UK heads towards Brexit.
Businesses that are comfortable with digital tools and use at least five in their day-to-day work are also three times more likely to create new services and products. The survey shows they are also twice as likely to create new jobs than those who continue to ignore the potential of technology. Advanced users are also twice as profitable, and three times more likely to undergo significant growth in revenue.
Operational use of digital tech
In terms of operational use, the survey breaks down where the tools are used within businesses. More than 90% of small businesses say they use digital tools for communication purposes. Just over 80% favour apps for logistics and internal management, and more than 40% use them for managing sales and marketing.
Digital tools commonly used for communications
The range of digital tools used for communications is wide. Around 75% of respondents rely on email to communicate with clients, customers, suppliers and peers. Social media is an important digital tool for just over half (53%) of small businesses and just less than a quarter rely on the company mobile app.
Digital tools used for Internal management and logistics
More than two-thirds (67%) of small businesses report using cloud-based software to manage people and logistics. Around 30% use customer relationship manager (CRM) tools, and 24% rely on the intranet.
Other tools commonly used to ensure small businesses run smoothly include:
- software that connects supply-chain operations with sales (21%),
- enterprise resource planning tools (20%),
- internal social networks (19%)
James Turner, Managing Director of Turner Little Limited says: “This study demonstrates the need for small businesses to take advantage of the technology available to them. To really compete on the world stage and match the innovation shown by other countries, the UK’s small business sector must embrace digital tools as much as possible.
“The digitisation of the business sector has clear and unequivocal benefits not just for small businesses, but for the economy as a whole. However, figures show that some small businesses are still not utilising the tools available to them.
“Data shows that a significant barrier for some small business owners is a lack of understanding of how to implement and use digital tools. This is an area that needs addressing, as investment into training and education will pay off in the longer term. We’re reaching a tipping point where small businesses that do not use digital tools will be at a serious disadvantage.”
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.