Small businesses could unlock £75bn by improving digital skills
If small businesses with low digital skills were to further increase their digital capability the UK economy could benefit by as much as £75bn according to the latest Lloyds Bank Business Digital Index.
The Index, the largest study of its kind into the digital capabilities of the UK’s small businesses, shows that those with the highest online capabilities are almost twice as likely to have increased turnover in the last 12 months (12% vs 20%).
The latest report also highlights that having less online experience is particularly challenging for sole traders. Significantly, 44% aren’t confident they can lead their business to digital success, while just over half (51%) said they don’t have access to the funding needed to grow their presence online. They are the least likely to invest in technology, with over three-quarters (76%) reporting they won’t invest at all.
However, improving the virtual shop window could lead the nation’s sole traders to an additional £24bn turnover annually.
Digital skills
64% of small businesses are now considered the most digitally savvy, having been spurred on by the challenges of the pandemic to improve their digital skills. This has grown from 49% in 2019, when less than half of the UK’s small businesses were in highest digital segment, the impact of the pandemic is clear on the way businesses have had to grow and adapt.
Regional Success
The study shows that regionally the North East has made the most progress since 2019, with the biggest jump (86% vs 62%) in small businesses with high digital capability and were closely followed by East Midlands (85% vs 68%) and the South West (84% vs 67%). Scotland (83% vs 82% has stalled on progress over the last 2 years although they still rank highly overall.
Gender parity
The Index shows that, for the first time, the UK has achieved gender parity on digital capability with 83% of female and 81% of male business owners having high-digital capability, up from 76% and 69% respectively in 2019.
Nick Williams, group director, group transformation, Lloyds Banking Group, said “Our latest Business Digital Index shows that the UK’s small businesses have made significant steps in digital growth since 2014, despite a changing socio-economic climate, a global pandemic, significant tech sector growth, and evolving consumer expectations.
“There is much for our nation’s small enterprises to be proud of and, if they continue taking steps to further improve their digital capabilities, a potential £75 billion could be added to the UK economy. This is a clear demonstration of the value they bring, not just economically, but as a central part of the communities they are part of.”
Mandy Ridyard, co-chair, West Yorkshire Combined Authority Local Digital Skills, said “The pandemic has forced businesses to adapt and overcome new and unexpected challenges, with digital adoption and transformation being key to the survival for many SMEs across West Yorkshire.
“We have seen SMEs make significant progress, however, there is still more work to be done. Within some businesses, productivity remains low and the number of SMEs without the requisite skills still remains too high.
“It is crucial we take national action to inspire and support all SMEs to realise the true benefits of a digital transformation and provide the reason to change that business leaders need to thrive. This is why we are thrilled to be working in partnership with Lloyds on the regional Lloyds Bank Academy.”
Case Study: Northern Sky Design (Nat Yates)
Nat Yates (Northern Sky Design) creates delicate glass pieces and landscape artwork in the North East, working with local shops and galleries to sell exclusive pieces in-store, as well as online through her website and social channels.
Nat uses digital tools, such as a Customer Relationship Management (CRM) tool to help her stay efficient, allowing her to keep customers updated on the latest offers, products and discounts. She is also able to use it to analyse her customer base, ensuring any targeted marketing through Instagram and Facebook reaches the right audience.
While having an in-store presence has been helpful, Nat’s online presence is vital and the positive impact comes from the efficiencies behind the scenes. It has allowed her to drive up to 50% higher profit margins and a wider customer base than through just being in store.
Nat Yates, owner, Norther Sky Design said: “Digital is the future – not just to help me sell my products online but also for how I run the business.”
