Chief Executive of TEDCO Business Support, James Craft, outlines some of the opportunities and challenges that digital technologies present to SMEs and explains how organisations wanting to move fast can take the handbrake off.
At last count, there were 5.5 million SMEs in the UK. That’s 99.8% of registered businesses in the country. So, it goes without saying that taking steps to support organisations with small teams has a crucial role to play in achieving economic growth.
One widely accepted way to drive this growth is to get SMEs adopting digital tools and solutions that will dramatically enhance productivity and efficiency. Digital adoption is not merely a concept; it’s a process by which small and medium companies can transform the way they do business. techUK’s ‘Small Enterprises, Big Impact’ report states that embracing digital adoption could add an impressive £232 billion to the UK economy.
But it’s important to note that for a small business owner working hard at day-to-day operations, putting time aside to assess, test and trial digital tech is easier said than done. Knowing where to start, how to upskill effectively and what to avoid is a commercial minefield.
There is, of course, a diverse range of barriers that can hinder the digital transformation journey of SMEs. Acknowledging these challenges is the first crucial step towards overcoming them. Just some of these challenges include:
Funding and finance of digital adoption
Financial constraints can undoubtedly be a hurdle. SMEs frequently mention difficulties in securing funding and managing the financial aspects of digital adoption. While the long-term savings can be great, the short-term costs leave many smaller organisations struggling to make the initial leap into the future.
Whether it’s purchasing new hardware or software, paying for consultancy support or simply funding the time for staff to go through training, not every SME is in a position to invest without help. Limited resources and high operational demands make it challenging for smaller SMEs to implement new systems or processes effectively.
I always encourage SMEs to do their research on funding and look for opportunities that meet their own needs and growth plans. In the North East, we’ve been involved in a range of funding schemes over the years as delivery partners – such as the Pathways to Funding North of Tyne programme. Through initiatives like this we can work with small businesses to secure investment when it’s needed most.
Complexities and feeling overwhelmed
The mere experience of integrating digital practices can be an obstacle, resulting in entrepreneurs feeling overwhelmed by the scale of the work needed. Digitalisation can appear complex to anyone without experience in the field, and these challenges are often intertwined with broader issues of change management.
A certain level of digital literacy and capability within the leadership team is necessary to smooth the process and reap the maximum reward from the time and effort invested.
Decision making and fear of change
SMEs often grapple with critical decisions around digitalisation such as choosing between off-the-shelf solutions or developing in-house systems, and ensuring the selected solutions are compliant and align with their industry’s requirements.
SMEs also frequently struggle to allocate the necessary resources and capacity to manage change efficiently and with control. Leadership with an appetite for change is crucial if an organisation wants to avoid falling behind the competition.
Sector-specific challenges
While there are many general challenges facing SMEs trying to adopt digital practices, the type of business and the sector it operates in can significantly influence the nature and intensity of digital adoption challenges.
Data security, bureaucratic hurdles and costs can all vary depending on the industry in question. What’s more, specific circumstances within an organisation can throw up curveballs – even geographical location can be a problem (think access to superfast broadband, for example).
Government support
The UK government undoubtedly has a critical role in championing digital adoption among SMEs. The government’s active involvement is vital in ensuring SMEs overcome barriers to digital adoption and remain competitive in the global market. However, in a landscape of ever-changing political priorities and promises, support for SMEs is never guaranteed. SMEs must stay alert to the digitalisation support available – particularly at a regional level – and utilise it when they can.
Addressing these challenges
Digital adoption is coming for all businesses sooner or later, and this should be seen as an opportunity rather than a hurdle within the small business community. To ensure this is the case, however, there is an urgent need for further impartial government support strategies to support SMEs in navigating digital obstacles.
This includes accessible financial assistance, impartial decision-making guidance, change management resources, and industry-specific solutions.
Tackling these challenges also requires continued efforts from business support providers and industry leaders to establish an environment conducive to digital innovation. By working collaboratively and sharing best practice, the SME community can make faster strides towards successful digital adoption.
TEDCO Business Support is here to guide you every step of the way. With 40 years of experience in supporting start-ups, we are committed to driving real change.
Thinking about self-employment? Let’s chat! Tell us a few details on this Initial Enquiry Form and we’ll be in touch to help you as much as we can.