Is digital transformation the answer to the recovery of SMEs?
Small to medium enterprises (SMEs) are essential to the UK economy. The government has noted that they contribute to 99.9 percent 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 remain at risk of failure in navigating their business through the pandemic. The current situation has rapidly changed the way that we interact with customers, how consumers buy, and the interests of clients and customers alike.
Everyone has become increasingly reliant on technology in 2021, whether to contact family or to order groceries. Businesses are also seeing the advantage of using technology to continue and progress 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 organization, and help to grow and recover their revenue. Here, we look at how a digital transformation can help recover SMEs and the steps businesses should take to integrate them.
The new experience for customers
Where the customer experience is at the heart of good business practice, it is also at the center of digital proficiency.
Improving customer experiences through digital transformation is being adopted by leading businesses around the world. In fact, 92 of the top 100 organizations have "mature digital transformation strategies in place" to improve how consumers interact with their brand. Compared to other organizations where only 22 percent of businesses have this strategy in place, it’s clear to see how SMEs are falling behind.
Digital transformations needn’t 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 emphasized the need for businesses to adapt with technology. For example, retail leader Primark dropped from £650 million in monthly sales to nothing in April, but digital-first enterprises thrived.
SMEs benefit from reactionary business and recognizing the successes of businesses to follow. Digital transformation is one way to keep ahead of the trend. 70 percent of business leaders recognized that their customer satisfaction increased significantly.
Technology transforming finance
Developing and affordable technology over the past five years 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, comes 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 they have in place a strong operations 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.
Gathering data -- and opportunities
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 percent 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 digitized schedules.
Innovating with agility
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 percent 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, organizing your investments to ordering takeaway, businesses can benefit from digital transformation by recognizing 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 recognize the attempt to provide the best possible service through digital transformation. Research indicating the revenue potential of digitized 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.
Andrew Millet is founder of Wisteria, who are statutory audit specialists.