Perspectives

Small business technology trends

Digital and online tools connect businesses to customers

Today’s consumers expect to be able to interact with businesses through online channels. But according to our recent small business study commissioned by Google, 80 percent of US small businesses are not taking full advantage of digital tools. Find out what is holding small businesses back from digital adoption and what steps they can take to successfully enter the digital age.

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Small business technology trends

Digital technology is driving many changes in consumer behavior and the business environment. With online tools, businesses have greater insight into customer preferences, and build lasting relationships with them. In today’s digitally-driven economy, many consumers now expect to be able to engage with businesses through online channels.

It’s no secret that using digital tools such as online and e-commerce marketing methods can benefit small business. Small businesses with less than 250 employees can access new markets and target new customers at a relatively affordable cost using digital tools. Deloitte’s analysis in Connected Small Businesses US found that, relative to businesses that have low levels of digital engagement, digitally advanced small businesses realized significant benefits. They:

  • Earned two times as much revenue per employee
  • Experienced revenue growth over the previous year that was nearly four times as high
  • Were almost three times as likely to be creating jobs over the previous year
  • Had an average employment growth rate that was more than 6 times as high
  • Were also three times as likely to have exported over the previous year

Despite these potential gains, 80 percent of US small businesses aren’t taking full advantage of digital tools such as data analytics and more sophisticated online tools. This next report in the series draws fresh insights from a survey of more than 2,000 US small businesses about why the majority of small businesses are not fully realizing their digital potential.

Explore more findings in the report.

Key drivers of digital engagement among small businesses

Greater market reach and brand promotion are among the top priorities for small businesses. 38 percent of small businesses cited increased sales and revenue as a benefit associated with using digital tools. Women-owned small businesses, which were found to be more digitally engaged than their male-owned counterparts, were more likely to identify increased sales as the top benefit resulting from the utilization of digital tools.

Organizational benefits such as improved communications, flexibility, and lower business costs are less likely to be identified by small businesses as drivers of technology adoption. Digitally advanced small businesses were twice as likely to have employees that collaborate regularly, as compared to businesses at a basic level of digital engagement. Collaborative employees are better able to generate value, innovate, and improve productivity. Many small businesses also believe that digital engagement is associated with happier employees: 69 percent of digitally advanced businesses stated that digital tools improve employee satisfaction.

One indicator of whether a business is digitally engaged is the tech savviness of its leaders. That’s because personal use of technology helps small business owners develop digital skills and improves their understanding of how to use digital channels effectively for customer engagement. 77 percent of US small business owners are regular users of technology for personal reasons, such as online shopping or consuming digital media.

What’s holding small businesses back in the digital age?

With so many small businesses not fully embracing the digital age, one might expect to find a broad range of barriers that are tough to overcome such as inadequate broadband, a lack of technical skills, or huge financial barriers to investing in technology. However, the issues are actually much simpler: many small businesses need to be made aware of the benefits of the internetand other digital tools.

Amongst the least digitally engaged small business, 40 percent believe that digital tools are “not relevant for my business,” and 38 percent that “they are not effective for my business.” That is an astounding finding, and indicates that less digitally engaged businesses may be unaware of the benefits associated with digital tools. This suggests that efforts to improve digital use across the US should focus on exploring and increasing awareness of the benefits that can be realized through digital technologies. In addition, 34 percent identified ‘privacy and security concerns’ as amongst their top three digital barriers.

How can we help the 80 percent to become more digitally engaged?

A combined effort between small businesses, policymakers and other stakeholders in the small business ecosystem is required to improve the digital engagement of US small businesses, particularly in cohorts that are currently less digitally engaged. Potential actions towards more digitally engaged US small businesses include:

  • Increasing awareness of digital opportunities
  • Improving digital skills training programs
  • Recognizing that different digital journeys
  • Preparing to address the challenges

Improving the digital engagement of 80 percent of US small businesses is not a task that can be completed overnight; however, taking these steps will enable less digitally engaged small businesses to seize new digital opportunities over time. This will be critical in achieving future small business growth as the consumer and business landscape become increasingly digital.

2017: The first findings

There are around 29 million businesses with fewer than 500 employees in the US, representing 99.7 percent of all US businesses and almost half of total private sector employment. The use of digital tools can help small businesse to improve their performance and respond to changes in the business and consumer landscape in an agile manner. Discover what insights phase one of the report reveals into the use of digital technology among the US small business community.

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