UK small businesses record levels of digital adoption in 2023
A recent report by the Federation of Small Businesses (FSB) found that small businesses in the UK are adopting digital technology at a record pace. The report found that 87% of small businesses now have a website, and 70% use online marketing.
This is a significant increase from the previous year, when only 75% of small businesses had a website and 55% used online marketing. The report suggests that the pandemic has accelerated the digital transformation of small businesses, as they have been forced to find new ways to reach customers and sell their products and services online.
Interestingly, the report found that small businesses that have adopted digital technology are more likely to be profitable. 60% of small businesses that use digital marketing are profitable, compared to only 40% of small businesses that do not use digital marketing.
The findings suggest that digital adoption is essential for small businesses in the UK. Furthermore, one can conclude that small businesses that adopt digital technology are more likely to be successful, both in terms of profitability and growth.
There are, however, a number of barriers to digital adoption for small businesses. These barriers include lack of skills, lack of funding, and lack of awareness of the benefits of digital technology.
The FSB report recommended that the government and other organizations provide support to small businesses to help them adopt digital technology. The report also recommends that small businesses themselves make a commitment to digital adoption and invest in the skills and resources they need to succeed online.
The report’s findings suggest that digital adoption is a key factor for small businesses in the UK. By adopting digital technology, small businesses can improve their profitability, grow their businesses, and reach new customers. In summary:
- The most common digital technologies used by small businesses in the UK are websites, social media, and email marketing.
- Small businesses that use digital technology are more likely to be aware of the latest trends and to be able to adapt their businesses accordingly.
- The main barriers to digital adoption for small businesses are lack of skills, lack of funding, and lack of awareness of the benefits of digital technology.
- The government and other organisations provide support to small businesses to help them adopt digital technology.
Examples of small business digital adoption
Here are some examples of the types of digital adoption involved in the small business sector:
- Websites: Having a website is essential for any small business that wants to be found online. A website can be used to showcase products and services, provide information about the business, and connect with customers.
- Online marketing: Online marketing is a broad term that encompasses a variety of activities, such as search engine optimization (SEO), pay-per-click (PPC) advertising, and social media marketing.
- Online marketing can be used to reach new customers, generate leads, and drive sales.
- E-commerce: E-commerce refers to the sale of goods and services online. E-commerce platforms like Shopify and WooCommerce make it easy for small businesses to set up an online store and sell their products to customers around the world.
- Cloud computing: Cloud computing refers to the use of remote servers to store and process data. Cloud computing can help small businesses save money on IT costs and improve their flexibility and scalability. For instance, cloud-based accounting software allows businesses to access their accounting data from anywhere, at any time. This can save businesses time and money, as they no longer need to maintain their own accounting software on-premises.
- Mobile apps: Mobile apps are a great way to reach customers on their smartphones and tablets. Mobile apps can be used to provide information, offer discounts, and facilitate customer service.
- Online invoicing and payments: Online invoicing and payments allow businesses to send and receive invoices and payments electronically. This can save businesses time and money, as they no longer need to mail invoices or process payments manually.
- Receipt scanning and tracking: Receipt scanning and tracking tools allow businesses to scan and track receipts electronically. This can help businesses to automate their expense reporting process and improve their cash flow management.
- Accounting automation: Accounting automation tools can automate tasks such as data entry, reconciliation, and reporting. This can free up businesses’ time so that they can focus on other important tasks.
- Data analytics: Data analytics tools can help businesses to analyze their accounting data to identify trends and make informed decisions. This can help businesses to improve their financial performance.
How can small businesses effectively adopt digital technologies and become digitally enabled?
If you’re a small business owner and you’re thinking about adopting digital technologies and becoming a ‘digitally enabled business’. That’s great! Digital technologies can help you improve your efficiency, productivity, and customer service. They can also help you reach new markets and grow your business.
But before you start adopting digital technologies, it’s important to to create a firm foundation for what lies ahead so here are some tips for small businesses that are looking to adopt digital technology in their quest for digital enablement benefits:
Start with a clear goal in mind. What do you want to achieve by adopting digital technology? Do you want to reach new customers? Increase sales? Improve customer service? Once you know your goals, you can start to develop a plan to achieve them.
Do your research. There are a lot of different digital technologies out there, so it’s important to do your research and find the ones that are right for your business. Talk to other small businesses, read online reviews, and attend industry events to learn more about the latest trends.
Start small and scale up. There’s no need to invest in a lot of expensive technology upfront. Start with a few small projects and see how they go. If they’re successful, you can then scale up your digital adoption efforts.
Get help from experts. If you’re not sure where to start, or if you need help implementing a digital technology solution, there are a number of experts who can help you. There are also a number of government and non-profit organisations that offer free or low-cost support to small businesses.
Adopting digital technology can be a daunting task, but it’s worth it in the long run. By adopting digital technology, small businesses can improve their profitability, grow their businesses, and reach new customers.
What are some of the benefits that digital adoption can bring?
There’s a lot of time and effort that goes into becoming a digital enabled company, not least in the planning and choice of technologies that match your businesses level of service and technological experience. Just the time alone, in training staff and managing customer expectations, mean that the benefits must be significant to justify the level of investment. So here are a few of the main benefits your business and customers can expect:
Increased efficiency: Small businesses are able to automate tasks and streamline their operations. This can free up time and resources so that businesses can focus on other important activities.
Reduced costs: Small businesses can save money on things like printing, postage, and travel. For example, businesses can use online tools to manage their finances, communicate with customers, and track inventory.
Improved customer service: Your business can provide better customer service. For example, businesses can use live chat and online support to answer customer questions and resolve issues quickly.
Increased visibility: In today’s business landscape, online visibility is critical and so the adoption of the right web enabling technologies is essential. This can lead to more customers and more sales.
New opportunities: An example of how visibility through digital technology can open up new opportunities. For example, businesses can use digital marketing to reach new customers around the world.
The importance of security: When adopting digital technology, it is important to take steps to protect your business from cyberattacks. This includes using strong passwords, keeping your software up to date, and being aware of the latest threats.
The need for training: Adopting digital technology can be a complex process, so it is important to provide your employees with training on how to use the new technology. This will help them to get the most out of the technology and to avoid making mistakes.
The importance of measuring results: It is important to track the results of your digital adoption efforts so that you can see what is working and what is not. This will help you to make adjustments to your strategy as needed.
Recent updates to the government initiatives and industry responses
Since the Help to Grow: Digital scheme closed in February 2023 there have been no further updates from the government. However, it is possible that the government will announce a new scheme in the future, but there is no guarantee of this.
The Federation of Small Businesses (FSB) has expressed disappointment at the closure of the Help to Grow: Digital scheme, stating that it was “a missed opportunity to help small businesses invest in digital technologies.”
The British Chambers of Commerce (BCC) has also expressed disappointment, stating that the scheme “was a valuable tool for helping small businesses to improve their digital capabilities.”
The government has said that it is “considering options for how to support small businesses with digital adoption in the future.”
Overall, there is a consensus that digital adoption is essential for small businesses to succeed in the modern economy. The government and other organizations must take steps to support digital adoption by small businesses, and it is likely that this trend will continue in the years to come.
Final thoughts
Digital adoption is essential for small businesses, and at TaxAgility, it’s a subject we discuss often with our client base, especially in relation to the array of cloud accounting tools available to them in the quest for digital enablement.
By adopting digital technologies and following an ongoing path of digital enablement, small businesses can improve their profitability, grow their businesses, and reach new customers. However, it is important to do your research and find the right digital technologies for your business. You should also start small and scale up as you become more comfortable with the technology.
Embracing Digital Enablement: How Accountants Empower Business Clients to Thrive in a Digital Era
The digital landscape is transforming the way businesses operate, requiring them to adopt digital enablement strategies to stay competitive and drive growth. Accountants play a crucial role in guiding their clients through this transition, helping them understand and implement digital tools and technologies.
In this article, we will delve deeper into the various ways accountants support their business clients in embracing digital enablement, providing specific examples and detailed insights.
Assessing the digital readiness of clients
Building a solid foundation is key to successful digital enablement. Accountants can provide a comprehensive assessment of their clients’ current digital capabilities, identifying areas for improvement and potential growth opportunities. By understanding the unique needs and challenges of each client, accountants can develop tailored strategies that drive digital success.
Before implementing digital enablement strategies, accountants can, with third parties, help clients gauge their digital readiness through a comprehensive review of their:
- Digital infrastructure: Assessing the client’s hardware, software, and network capabilities to determine if upgrades or replacements are needed.
- Processes and workflows: Identifying inefficiencies and bottlenecks that can be addressed through digital tools or automation.
- Digital skills and knowledge: Evaluating the client’s team’s proficiency in using digital tools and technologies, pinpointing areas where additional training may be required.
- Industry trends and competitor analysis: Comparing the client’s digital maturity to industry benchmarks and competitors to identify gaps and opportunities.
Educating clients on the importance of digital enablement
Change can be daunting, especially when it comes to adopting new technologies. To help clients overcome their hesitations and recognize the value of digital enablement, accountants can provide education, resources, and real-world examples. By illuminating the numerous benefits that come with digital adoption, accountants can inspire their clients to embrace innovation with confidence.
To help clients appreciate the value of digital enablement, accountants can:
- Share success stories: Presenting case studies of businesses that have successfully adopted digital technologies and the benefits they have experienced, such as reduced costs, increased revenue, and improved customer satisfaction.
- Highlight government incentives: Informing clients about government grants or incentives available for adopting digital technologies, such as the UK’s Making Tax Digital initiative.
- Discuss future-proofing: Emphasising the importance of digital enablement as a means to future-proof their business against disruptive technologies and evolving customer expectations.
Recommending and implementing digital tools
The right digital tools can revolutionise a business, streamlining processes and unlocking new opportunities. Accountants, with their in-depth understanding of their clients’ operations, can recommend and implement the most effective tools tailored to each client’s unique needs. From cloud accounting software to e-commerce platforms, accountants can help clients harness the power of digital technologies.
Accountants can recommend specific digital tools tailored to their clients’ needs, including:
Cloud accounting software: Platforms like Xero, QuickBooks, and Sage offer robust features, such as real-time financial data access, invoicing, payroll management, and integration with other business tools.
Automation tools: Solutions like Zapier or Automate.io help clients automate repetitive tasks, such as data entry, email notifications, and report generation.
Data analytics tools: Tools like Microsoft Power BI or Tableau enable clients to analyse financial data, identify trends, and make data-driven decisions.
CRM systems: Platforms like Salesforce or HubSpot help businesses manage customer interactions, track leads, and analyse customer behaviour.
E-commerce platforms: Shopify or WooCommerce simplify the process of setting up and managing an online store, allowing businesses to reach a broader audience.
Providing training and support
Adopting new digital tools is only the beginning; clients must also be proficient in using them. Accountants can offer, with specialist third parties, essential training and support, ensuring clients understand how to leverage their new digital tools to their fullest potential. By providing ongoing assistance, accountants can help clients navigate the learning curve and overcome any challenges that arise during their digital journey.
Accountants can offer training and support to clients in various ways:
- Conduct workshops or webinars: Accountants can organise workshops or webinars to train clients on using digital tools effectively.
- Create custom guides and resources: Developing tailored user guides, video tutorials, or other resources can help clients navigate new tools with ease.
- Offer ongoing support: Providing ongoing support through email, phone, or in-person consultations ensures clients can address any challenges that arise during the transition.
Assisting with cybersecurity and data privacy
As businesses embrace digital technologies, they must also prioritise the security of their digital assets and the privacy of their customers’ data. Accountants can help clients navigate the complex world of cybersecurity and data privacy, offering guidance and recommendations to minimise risk and ensure compliance with relevant regulations. By prioritising security, accountants can help clients protect their valuable information and build trust with their customers.
To help clients safeguard their digital assets, accountants can:
- Recommend secure cloud storage solutions: Platforms like Dropbox, Google Drive, or Microsoft OneDrive offer secure storage with encryption and access controls.
- Implement multi-factor authentication: Encouraging the use of multi-factor authentication adds an extra layer of security to clients’ digital accounts.
- Develop policies for data management: Accountants can help clients create policies for data storage, access control, and retention, ensuring compliance with data protection regulations like GDPR.
- Conduct risk assessments: Regularly assessing clients’ digital environment for potential vulnerabilities and recommending appropriate security measures.
- Educate clients on cybersecurity best practices: Providing clients with guidance on password management, software updates, and safe browsing habits to minimise the risk of cyber threats.
Guiding clients through digital transformation
Digital enablement is an ongoing journey, requiring businesses to continuously adapt and innovate. Accountants can serve as trusted advisors throughout this process, helping clients stay ahead of emerging trends and capitalise on new opportunities. By offering strategic advice and expert guidance, accountants can help their clients thrive in the ever-evolving digital landscape.
Accountants can serve as trusted advisors throughout the digital transformation journey by:
- Staying informed about emerging trends and technologies: Accountants can attend conferences, participate in industry forums, and read relevant publications to stay current with the latest digital advancements.
- Offering strategic advice: Based on their knowledge of industry trends and client needs, accountants can provide tailored advice on digital investments, technology adoption, and process improvements.
- Helping clients adapt to new business models: As digital technologies disrupt traditional business models, accountants can assist clients in adapting to new revenue streams, distribution channels, or customer segments.
- Facilitating collaboration and change management: Accountants can help clients navigate the cultural and organisational changes that come with digital transformation by fostering collaboration, communication, and a growth mindset among the team members.
How TaxAgility can help your firm navigate the digital enablement process
TaxAgility can play a critical role in helping you understand and implement digital enablement strategies. By assessing your digital readiness, educating you on the importance of digital enablement, recommending and implementing tailored digital tools, helping identify training and support, assisting with cybersecurity and data privacy, and guiding you through the overall digital transformation process, we help our clients empower their businesses to thrive in an increasingly digital era.
We’re here to assist and advise as problems and opportunities arise. Call us today to discuss how we can help you, on: 020 8108 0090.
Note: This article is not intended to provide financial advice or guidance, it is for interest only.