Small to medium enterprises (SMEs) are essential to the UK economy. The government has noted that they contribute to 99.9 per cent of all private sector business in the country with a turnover of £2 trillion.
However, entering the largest recession since records began and even after unprecedented financial help, small firms are at risk of failure in navigating their business through the pandemic. The current situation has rapidly changed the way we interact with customers, how consumers buy, and the interests of clients and customers alike. Everyone has become increasingly reliant on technology in 2020, whether to contact family or to order groceries. Businesses are also seeing the advantage of using technology to sustain and improve their business.
With the World Economic Forum predicting that the value added by digital transformations across all sectors could be larger than $100 billion by 2025, this key strategy may be the answer to your business survival. Digital transformations give business leaders the opportunity to step back, uncover the best practice for their organisation, and help grow and recover their revenue. Here, we look at how a digital transformation can help SMEs recover and the steps businesses should take to integrate them.
Where the customer experience is at the heart of good business practice, it is also at the centre of digital proficiency. The idea to improve customer experiences through digital transformation is being adopted by leading businesses around the world. In fact, 92 of the top 100 organisations have “mature digital transformation strategies in place” to improve how consumers interact with their brand. Compared to other organisations where only 22 per cent of businesses have this strategy in place, it’s clear to see how SMEs are falling behind.
Digital transformations don’t always have to be complicated. Simple examples include the integration of an e-commerce platform on your brand’s website. Digital transformations are about identifying problems in your current system and finding a better way to represent the needs of your customers. The recent national lockdown emphasised the need for businesses to adapt to, and with technology. For example, while retail leader Primark dropped from £650 million in monthly sales to nothing in April, digital-first enterprises thrived.
SMEs benefit from reactionary business and recognising the successes of businesses to follow. Digital transformation is one way to keep ahead of the trend. 70 per cent of business leaders recognised that their customer satisfaction increased significantly.
Over the past five years, the development of affordable technology has opened access to digital card readers for an increasing number of small businesses. The dramatic shift from cash payments to credit and debit cards has been accentuated by encouragement to use electronic payments for distancing and hygienic reasons, following the coronavirus pandemic. Card payments are more accepted by the British public than ever, and essential for growing businesses.
However, with a change in tender and how finances are processed, come extra layers of legality. For example, interchange fees are charges for using services including Mastercard and VISA. The fee is a handling charge, processing payments to avoid fraud, debt, and assessing risks in accepting individual payments. Technology opens your business to new revenue opportunities by accepting new digital tenders, but with the transformation, you must account for new regulation.
While technology advances systems, processes become more complex and can become more difficult to control and maintain. To mitigate this, companies need to ensure that they have in place a strong operation and IT team to process transformations, an internal audit team who can influence them, and most of all, a statutory audit accountant who can challenge the purpose and fairness of financial accounts.
It’s become a repeated concept, but a message that should still hold true despite its obliqueness: “Data is worth more than oil.” The comparison is a little vague, but it suggests that learning about your customers can add profitability to your business. This doesn’t mean selling data on. It means using the data you’ve collected to better understand your market. Who are your customers, when do they buy, and how they buy are all relevant questions that can be answered with precision through data collection.
Tracking the metrics of your business allows you to understand which strategies are most effective. One survey on the use of data in business showed that 49 per cent of businesses believe that analytics are of most use in driving business decisions.
While you can understand more about your customers, digital transformation can also indicate how your staff work. Questions including ‘Which tasks take the longest?’ and ‘Who are the most effective staff team?’ can be answered by reviewing sales and work data with digitised schedules.
Digital transformation improves agility across businesses. It allows companies to understand when to expect change and how to efficiently change practices to adapt with them. Digital companies often consider how they expand their business into relating avenues. They look at how the business can diverge from their original mission while keeping with the culture that your business has curated. Technology allows these new approaches to be developed alongside extending business enterprises.
Research shows that 68 per cent of businesses commend agility as one of the top three initiatives that businesses can strive towards. Reflect on how your customers and staff react to technology, does it make the business process more fulfilling and efficient?
Agile business interactions are becoming increasingly common in the digital market. For example, the use of chatbots on social media allows a business to track customer interaction and complete increasingly complex and specific tasks without the need for human interaction. From banks to pizza shops, organising your investments to ordering takeaway, businesses can benefit from digital transformation by recognising the needs of the customer.
Technological innovation is as much as a risk to businesses as a financial recession. The increasing capabilities of technology means that it is difficult to predict future sector changes. A digital transformation is the only way a business can prepare for this future of innovation, meaning that potential developments can efficiently integrate into their business operation.
As a brand, staff and customers will recognise the attempt to provide the best possible service through digital transformation. Research indicating the revenue potential of digitised companies also stresses the need to adapt to the rapidly changing times. After all, it’s not just technology that is being changed, but society as well.
The go-to phrase, it seems, to describe the current state of affairs is the “new normal.” Not only does this refer to the ongoing social distancing precautions adopted worldwide, but it also encapsulates the long-term economic shifts precipitated by the pandemic.
While for many these economic affects have been decidedly negative, especially as the UK’s furlough scheme draws to a close, it is worth evaluating the positive effects of the virus as it relates to British entrepreneurship.
An uptick in entrepreneurship among the public is undeniable. During the height of lockdown, Startup.co.uk observed that five new British businesses were being founded every single day in April 2020, representing a 60 per cent jump on figures from April 2019. Why exactly was this the case? Why did COVID-19, and the ensuing lockdown, push so many to carry out their entrepreneurial dreams? As discussed below, this is due to a variety of factors.
Firstly, the general shift to homeworking, coupled with soaring unemployment, gave many the autonomy needed to act on their entrepreneurial intentions. No longer spending time commuting or taking part in traditional social leisure activities, those self-isolating at home had plenty of time to refine and pursue their own start-up ideas.
Secondly, the lockdown facilitated the birth of entirely new industries, as consumers adjusted to new ways of living. Faced with a lockdown, the needs of consumers began to change dramatically, and this opened up the way for new innovative products and services. Suddenly, entrepreneurs were able to explore how technology could be creatively used to meet consumer needs during lockdown. As a result, some industries were forced to completely change the way they engaged with the clients.
For self-starters with an innovative idea and new-found time on their hands, the lockdown provided the spark needed for a new generation of entrepreneurs to emerge. In many respects, these entrepreneurs have been vital in helping the country overcome the initial challenges posed by COVID-19.
But what exactly are these new business opportunities under lockdown? And what do these new company founders need to keep in mind when embracing their entrepreneurial side?
The lockdown has completely changed the way people are able to shop. To avoid queues and the risk of not finding certain products, demand for grocery delivery services skyrocketed. Existing delivery systems could not keep up with demand, and this meant that customers faced waiting weeks for their food to arrive.
Innovative entrepreneurs were quick to act, with Ashdown Organics being a great example. When their founder, Oliver Loveday, struggled to find work as a mountaineering tour guide at the beginning of lockdown, he took up a job as an ASDA delivery driver.
Witnessing first-hand the pressure placed on existing delivery services, he decided to establish his own food delivery service called Ashdown Organics. Having noticed that demand for organic products was rising, his startup now delivers upwards of 70 food boxes from farm shops, bakeries, and florists across East Sussex every week.
Gemma Perlin provides another example of an innovative, entrepreneurial reaction to the virus. With television sets forced to close across the world due to COVID-19, her career as a documentary filmmaker was forced to go on pause. Taking advantage of the new free time she had, Perlin decided to pursue her long-standing dream of becoming a behavioural change coach.
By utilising her Neuro-Linguistic Programming degree, she launched her own website and began offering online sessions within days of the launch. In many respects, COVID-19 provided an opportune time for Perlin to act on her long-standing entrepreneurial ambition, taking advantage of the market demand for digital communication during lockdown by offering a popular service.
Both these examples show just how entrepreneurs have embraced lockdown and launched exciting new businesses. Importantly, there are still fundamental rules that entrepreneurs should not overlook when launching a new product or service to market.
First and foremost, you must identify a gap in the market. No matter how fantastic an idea for a product and service is, if the demand is too niche or too general, success will be limited. Conducting meticulous research, and seeking out as much honest feedback as possible, is paramount in properly measuring the demand for your idea that exists among society.
Secondly, prioritising the perfection of the minimal viable product (MVP) before engaging in business expansion or additional products is integral to building a successful company. If delivering goods door-to-door, ensure your delivery systems are as streamlined as possible before planning to launch new or re-designed products or services. It’s all about creating a strong foundation from which to grow the product, instead of taking drastic leaps forward.
Finally, you must ensure that you maximise your product-market fit. What I mean by this is simple. Customers demand more from businesses than ever before, and the uncertainty brought by COVID-19 may dissuade people from changing their consumer habits unless absolutely necessary. As such, you must guarantee that whatever your company offers will indubitably improve the lives of your customers.
If entrepreneurs keep these key considerations in mind and continue to capitalise on the business opportunities hidden during lockdown, I have no doubt that the community will be positioned to overcome the challenges posed by the COVID-19 pandemic. Britain has a long history of innovative entrepreneurism, and this is exactly what the country needs to meet the ever-shifting demands of consumers during these trying times. That’s why I actively encourage budding entrepreneurs to be on the lookout for gaps in the market and develop solutions that address the changing needs of consumers and businesses.