UK micro businesses are sitting on a £16.6bn “digital dividend”, according to new research claiming greater adoption of technology could unleash unprecedented levels of productivity.
As part of the “largest ever study” of Britain’s micro businesses, the Enterprise Research Centre (ERC) found that doubling the adoption of digital technology could bring a £16.6bn dividend to the UK economy.
The potentially huge boost to productivity at the country’s smallest firms could shift their reputation of being a “drag” on UK productivity, the study claimed.
Meanwhile, ERC academics said their findings could have far-reaching consequences on how policymakers and business groups communicate the benefits of digital adoption to startups and already-established firms.
Researchers detailed how the five technologies could be crucial in unlocking micro business productivity.
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Cloud-based computing
Use of cloud-based computing leads to an increase of 13.5% in sales per employee (a proxy for productivity) after three or more years.
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Customer Relationship Management software
Customer relationship management (CRM) software use adds 18.4% to sales per employee over three years.
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Ecommerce
Ecommerce adds 7.5% to sales per employee over three years.
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Online accounting software
Web-based accounting software leads to an increase in sales per employee of 11.8% over three years.
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Computer-aided design (CAD)
CAD leads to a 7.1% increase in sales per employee.
Use of digital technologies has grown rapidly among UK micro businesses in recent years, with firms using cloud computing growing from 9% in 2012 to 43% in 2018, and web-based accounting software growing from 15% to 42% over the same period.
However, the study found that around a quarter of UK micro company owners are currently making no use of digital technologies whatsoever, while a further quarter use only one of the above.
Commenting on the findings, Stephen Roper, director of the Enterprise Research Centre, said the study was the “first evidence” of the value of digital adoption to micro business productivity in the UK.
“There’s a clear ‘digital dividend’ for the productivity of our smallest firms from adopting certain technologies and these effects increase with the number used,” Roper explained.
“Micro businesses play an important role in all of our lives. They are our plumbers, our builders, our hairdressers and our mechanics. They are also our architects, designers, artisans, lawyers and accountants.
“By rooting business support and public information campaigns in the evidence, policymakers can help these firms to raise their productivity and have a major impact on the prosperity of UK plc.”
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