The biggest challenge of a business from any industry is achieving profitable growth. In today’s business environment, where technology is constantly evolving, digital capabilities offer companies the opportunity to drive competitive advantage, increase customer relationships and expand geographical reach. For small businesses especially, digital can be easier said than done, but increasingly it’s something that can’t be ignored.
We recently released a report with Oxford Economics that outlined the huge potential of digital technologies to grow the UK’s economy. As part of the study, we asked small and medium sized enterprises (SMEs) how much more revenue they would expect to generate if they had access to the best digital capabilities available, and how many more people they would expect to hire. We found that the economy as a whole could be boosted by £56 billion per year (equivalent to 1.5% of total GDP), and that SMEs would expect to hire over 920,000 people over the next two years. The results show that SMEs recognise the potential of digital to drive growth; however making it a reality will require more of them to become digital leaders.
In the report, digital leaders were classified as firms which prioritise investment in a range of digital capabilities: from technology infrastructure and the digital workforce, to employing open and collaborative partnerships and digital customer engagement. Digital leaders large and small are more profitable, faster-growing and more confident in their ability to compete than other businesses. While on average digital leaders don’t spend any more money on technology than other firms, they spend it more wisely, working smarter to achieve better results. Our research found that fewer than one in 10 small businesses are currently true digital leaders, meaning there is work to be done for other SMEs to catch up.
It’s all very well being told to “embrace digital”. However, deciding how to do so can be complex and often overwhelming. So here are our five top tips on becoming a digital leader, and staying ahead of the curve:
- Understand how your industry is being affected by digital technologies, not only the moves of known competitors but also those of agile new entrants.
- Consider your own digital opportunity. Can you reach out to new markets, change your business model, improve your product and the customer experience, get greater value from information or implement new ways of working?
- Estimate the investment needed in digital capabilities, recognising that you not only need to deploy the best technology, but also develop the broader business capabilities to get the most out of the investment, or even bring in new talent.
- Develop a convincing business case, including appropriate metrics, based on an appreciation of the benefits that digital capabilities can generate. A well-developed business plan will help to both secure funds and ensure you’re focused on getting the most out of digital.
- Assess and progress. You need to keep aware of new opportunities and adapt quickly when needed. Even digital leaders will need to work hard to stay ahead of potential competitors.
Although you might have fewer resources than larger businesses, you do have a greater opportunity to use digital to grow in the years ahead. Smaller businesses are often more agile and digital can level the playing field, helping to pose a challenge to large and established players through innovation. Our study shows the time is right for SMEs to take a leap of faith and seize the digital opportunities ahead.
By Mike Smith, Director of Small Business, Virgin Media Business