Procurement · 2 November 2017

1.6m owners lack basic digital skills and their businesses pay the price

Male and female colleagues using digital tablet. Baristas are looking at technology. They are standing in coffee house.
Problem solving and collaborating via technology were among the measures of basic digital skills

Around one in four small UK business owners remain in the “digital slow lane”, as a new report finds that founders with high digital capabilities are three times more likely to increase their turnover.

For its latest Business Digital Index, Lloyds Bank measured the digital capabilities of 2,000 small business owners across the UK, analysing online behaviour and survey responses to assess their attitudes towards technology.

The subsequent report confirmed the importance of strong digital skills to business success, identifying four central metrics to measure capabilities, otherwise known as the UK Basic Online Skills framework.

  1. Managing information: Finding and storing digital information and content
  2. Communicating: Collaborating and sharing with others
  3. Transacting: Selling goods and registering for government services
  4. Creating: Engage with communities and create basic content
  5. Problem solving: Increase confidence by using digital tools to find solutions

According to the research, 1.6m company owners – 41 per cent of Britain’s small business leaders – were unable to demonstrate all five skills. But, since the index was first published in 2014, twice as many business owners have developed high digital capabilities to some degree.

Lack of digital skills holding you back? Selling online is simpler than you think

A wide range of benefits were uncovered for those confidently showing the five skillsets. Digitally-savvy founders typically generated higher turnover, made cost savings and even reduced the amount of time employees need to work.

The most digital businesses were also 11 times more likely to trade overseas than those lacking skills.

At the other end of the spectrum, some 118,000 UK firms were not using the internet at all.

Commenting on the findings, Nick Williams, director of consumer and commercial digital at Lloyds Banking Group, elaborated on some of the central benefits to leading a company with high digital capabilities.

“Since launching the index in 2014, we have seen more than twice as many organisations develop high digital capabilities, which shows great progress,” Williams said.

“This is giving them a shortcut to success in business, increasing sales, improving productivity and giving back almost a day a week in time savings.”

Responding to the research, government digital minister Matt Hancock said technology was creating “huge advantages” to small businesses, who are “saving time, attracting more customers, and marketing and transacting more effectively”.

“We must help those organisations that are currently behind the curve realise these benefits too,” he added.

“Thirty nine per cent of small businesses and charities without full basic digital skills are on the cusp of gaining them. We want to help them do that while supporting the one in ten organisations that are further behind.”

In 2016, a report from the parliamentary Science and Technology Committee found that the so-called “digital skills gap” costs the UK economy £63bn in lost GDP every year.

To help small business owners develop digital skills, the government this year opened the National Cyber Security Centre to inform about online safety, and has implemented a Universal Service Obligation to ensure every company has access to superfast broadband by 2020.

Find out why Martha Lane Fox believes the government’s digital strategy does not go far enough

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ABOUT THE EXPERT

Simon Caldwell is a reporter for Business Advice. He has a BA in politics and communications from the University of Liverpool, and previously worked as a content editor in the ecommerce industry.

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