With upwards of 5.7m SMEs in the UK in 2018, accounting for 99% of all businesses, competition has never been more fierce. And in the face of Brexit uncertainty, it’s crucial that all businesses no matter their size, must be proactive rather than burying their head in the sand and waiting to see what happens. One of the key actions any business can take, no matter the size, is to place innovation at their core to nurture and sustain growth and mark themselves as true competitors in their sectors.
Interestingly, however, our most recent Collaborate UK research of over 1,000 SME decision makers revealed that while 79% of SMEs see investing in technological innovation as important, one in ten haven’t taken any steps to do so over the past 12 months. This will almost certainly have an impact on their bottom line and ability to adapt.
In an increasingly digital world, adopting new technology is crucial for businesses to stay relevant. Here are some things to consider.
Businesses run the risk of lagging helplessly behind the competition unless they regularly invest in technology that drives both progress and performance. Those who can be nimble and responsive to new technology are the ones who will survive and thrive. But how do they know what innovations they should focus on?
First and foremost, SMEs must understand that blindly funnelling funds into technology can only backfire. Instead, they should step back and take a wider look at the short, medium and long-term advantages of different innovations for their particular business. Whether it’s using tech to improve customer experience, augmented reality (AR) to advance business processes, machine learning to improve customer experience, smart machinery for factories and warehouses or powerful analytics to track sales and distribution of goods, the opportunities are endless.
For SMEs, adopting such technologies can bring massive benefits. Only by focusing efforts towards innovation can smaller firms hope to compete with their larger, better-resourced competitors. But while it’s clear that most businesses are aware of the importance of adopting new technologies, a list of barriers has emerged which are preventing them from making the investment needed. Our research found that 38% of SMEs cited a lack of budget as the greatest inhibitor to wide-scale adoption of tech, while concerns about security (26%) and the fact that staff would have to be trained to use it (24%) follow not too far behind.
While these barriers can’t be overlooked there are ways around them, whether that’s choosing quality over quantity and researching one piece of new tech to invest in over many, or making use of the free or low cost trials available for SMEs on online platforms, there are many ways to ensure such challenges don’t block their path to progress. After all, as we charge into a new era of business opportunities, innovation will be key to turning the tide, reinvigorating competitive businesses and recreating high levels of confidence.
It’s a simple fact that businesses looking to succeed must be open to collaboration with other companies. In fact, our research revealed that almost a fifth (18%) of SMEs would be more likely to adopt new tech, like AI, blockchain, or automation if they worked with other businesses of a similar size and scale to increase their chances of success. A further 27% of businesses would be more likely to adopt new tech if there was more information available on what would work for their specific business, while 16% would like to have case studies of other SMEs adopting new tech.
Businesses owners don’t have to always work alone. Collaboration with fellow like-minded small businesses, whether by joining up on projects, utilising each other’s skills or simply exchanging advice, can be rewarded with extra support, a new innovation network and bags of inspiration.
But while collaborating with other companies to boost innovation is important, change won’t stick if it isn’t embraced by the company as a whole. Everyone must be brought on the journey towards technological change after all, employees are at the forefront of the business and have invaluable insights into the ways that technology can help streamline a business’ process. In order to truly foster a culture of innovation, employees at all levels must be engaged and involved at some level; whether that’s through proactive suggestions, quarterly brainstorms or company surveys.
Innovation is key to the survival and growth of smaller businesses, but for this to have an impact on the wider UK economy the focus needs to be on how to improve productivity across all of the UK’s SMEs. In fact, research from the CBI suggests that by encouraging more businesses to take advantage of existing technologies, management practices and business support such as cloud computing, mobile technology and e-purchasing, the UK economy could receive a £100bn boost and see a 5% reduction in income inequality.
To help achieve this, it should be standard government policy to support and encourage disruptive innovation and competition amongst SMEs. Interestingly, however, our research suggests that they are falling short in this area, with 34% of SMEs revealing they would be more likely to adopt new tech in the future if there was more government support or bursaries available.
While we welcomed the launch of the government’s Business Basics Programme last year, which includes a recently-announced £2m grant to encourage SMEs to introduce proven technologies, it’s clear that the government must do more to support them; they need to take a critical look at the existing barriers to tech innovation. From earmarking funding for business tech research projects and development grants to developing hubs for business tech collaboration where businesses can come together to celebrate existing success and learn from best practice, as well as introducing tax breaks for businesses investing in productivity technology, there are many ways to help drive innovation forward.
What it comes down to, is this: SMEs are the backbone of our economy, an economy that is now driven by digital. To stand out from the crowd, boost productivity and provide the best possible customer experience, businesses must use technology as a core part of their daily practices. After all, technology is a true game-changer that when harnessed correctly and strategically has the potential to take a small business to the next level in the digital future.