Procurement · 10 September 2015

Small businesses turning to digital for reassurance, optimisation and transformation

Micro businesses want to embrace technology, but are faced with barriers
Micro businesses want to embrace technology, but are faced with barriers

With over half of small companies in the UK already offering goods and services through an online channel, the Federation of Small Businesses (FSB) has categorised the three ways it is being leveraged.

The FSB set out to determine what benefits are derived from digital communication services, the barriers that exist preventing small businesses from doing more online and unveil policy changes from the government, Ofcom and industry groups deemed necessary.

Its study, “Reassured, optimised, transformed: Driving digital demand among small businesses” registered 40 per cent growth in sales last year due to being online. In today’s market, 65 per cent of small businesses use social media, 55 per cent cloud computing, 11 per cent have an app and 42 per cent view digital skills as important for business growth, the survey found.

The three categories the FSB has created to summarise the different approaches small firms take to digital are: business reassurance, business optimisation and business transformation.

On the reassurance front, the digital benefit is having a “new and reliable” way of connecting to customers, suppliers and employees. With optimisation, businesses here see digital as a way to secure time and costs savings. Finally, transformation firms are seen as “digitally advanced” and use it as a springboard to do new and different things – aiding expansion.

FSB has found, mirroring a number of other studies and commentators, that smaller firms throughout the UK are calling out for fibre-grade internet connections.

Those which have not yet upgraded to superheats broadband, or have not been making “full use” of digital services”, the FSB noted “confusion and misconceptions” regarding different elements of the telecoms market.

“Many business owners were sceptical about the speeds promised by broadband providers, with some of those currently subscribed to fibre-optic broadband still saying that they did not have access to what they considered to be superfast broadband,” the survey stated. “This issue contributes to a lack of trust of communications providers, and can again lead to disengagement from the marketplace.”

The barriers to doing more online were also split into three categories: satisfaction with the status quo; infrastructure; and quality of service issues affecting small businesses as customers.

Only 36 per cent of businesses know that super-fast broadband is available in their area, “significantly lower” than the Ofcom finding of 56 per cent availability for small businesses.

The FSB suggests the government tailor messages from its Business is Great campaign to align it with the different benefits that super-fast broadband can bring to different small businesses. More effective messaging is also required, it said, to support the integration of mobile services within  small businesses.

In line with what Ofcom has declared, the FSB would also like to see the government set “explicit targets” for superheats coverage for small businesses.

Mike Cherry, FSB Policy Director, said: “Large numbers of small firms are using new digital technology to revolutionise the way they do business, but the market still has barriers stopping firms from seizing these opportunities. The success of the digital revolution has led to ever higher expectations from businesses and consumers which at times the market struggles to deliver. Business customers feel confused by the complexity of the market and struggle to assess how new services would benefit their business.

“A voluntary code of practice will help simplify matters and build trust between business customers and service providers. It will also allow small firms to better understand what services are available and how they can integrate these into their future business strategy. Getting this right will provide a boost to future economic growth and productivity.”

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Hunter Ruthven was previously editor of Business Advice. He was also the editor of Real Business, the UK's most-read website for entrepreneurs and business leaders at the helm of growing SMEs.

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