Small businesses that embrace tech thrive: study

Canadian small businesses have been giving lip service to the benefits of technology but have failed to actually employ digital tools, according to a 2018 study by the Business Development Bank of Canada (BDC).

The study, titled How to Make the Digital Shift in Your Business surveyed 2,000 Canadian business owners and 600 U.S. businesses. The results revealed that only 19 per cent had “strongly adopted digital technology and culture” and 57 per cent were rated as digitally weak. That amounts to just one in five small businesses that are using digital tools to make their companies more productive and effective.

Yet, in the report, the BDC noted that companies with higher digital maturity were 62 per cent more likely to see higher sales numbers, and experience profit growth.

Other research has yielded similar results including one commissioned by Google from Deloitte. The 2017 report indicated that smaller businesses were able to utilize technology and gain access from markets they may not otherwise have been able to access.

In addition, they reported that digitally advanced enterprises earned twice as much revenue per employee; and nearly four times the amount of revenue growth. Yet, 80 per cent of small businesses in the U.S. were not using digital tools.

The study surveyed over 2,000 small businesses to try and discover why they were not using technology to their advantage. The findings indicate the hurdle to digital maturity is a lack of awareness.

“Amongst the least digitally engaged small businesses, 40% believe that digital tools are ‘not relevant for my business’, and 38 per cent that ‘they are not effective for my business’. This 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,” the authors wrote.

The study also discovered that rural businesses and those with older owners were more likely to fall behind in the digital adaptation.

In response to the results, the BDC launched an online assessment tool that enables companies to measure their digital maturity and compare it with other businesses across the country. The tool also offers tips on how to improve their rating, as well as ways to adopt new technologies.

The study and tool were a part of the kick off to BDC Small Business Week in October 2018.

They’re happy because they’re using technology.

The bank has also created a $250 million lending fund for business owners that can be used to buy software that can be used for existing processes.

BDC vice president of research and chief economist Pierre Cléroux said it was important for small businesses to implement digital tools to stay relevant in the marketplace. “In today’s connected, automated and data-driven world, it’s vital for Canadian businesses to embrace new technologies to keep up with the competition,” Cléroux said.

Risk to technology-adverse businesses

As technology continues to advance, reports have indicated companies that fail to adapt put their future at risk.

“Technology diffusion has to become as important as technology creation,” David Crane wrote in IT World.

“Canadian companies lag in adopting the most advanced technologies and are less competitive than they could be. That’s a big cost to jobs and the economy.”

Crane also notes that Jay Myers, president and CEO of Canadian Manufacturers & Exporters, has warned that 30 per cent of manufacturing companies may go out of business because they do not incorporate advanced technologies into their processes.

Yet, it is not just the manufacturing industry that is struggling to adapt. K2E’s Accounting Operations and Technology Survey has revealed that the accounting industry is also facing technology challenges.

The report indicates that a quarter of respondents’ lack technical knowledge that could help them further their processes.

The Canadian Accountant publication noted that the numbers show that a large component in the industry are at risk for falling behind when it comes to technology. Less than half of accounting firms have updated their tax software in the last five years.

Government gets in on promoting tech for businesses

To help Canadian companies stay competitive both within the country and globally, the government has been focusing on digital implementation for businesses.

They have a web page dedicated to technology advice specific for businesses across the country. Through it, the government offers advice for small businesses on the different forms of digital tools available including intranet, extranet, HR software, CRMs, and e-commerce.

In addition to advice, the government has also created the $100 million Innovative Solutions Canada program to encourage small business to innovate.

Two companies have already been awarded $150,000 each through the program.

“Small businesses are the backbone of our economy and employ over 8 million hard-working Canadians,” said Mary Ng, minister of small business and export promotion.

“That’s why our government is committed to helping small businesses start up, scale up and access new markets. Innovative Solutions Canada is a fantastic program that uses government procurement to help small businesses innovate and then commercialize their innovations.”

Security concerns

There are some valid concerns that small businesses have expressed in relation to technology, including online security.

Research by the Canadian Internet Registration Authority (CIRA) found that about a third of small businesses across the country fell for phishing scams in 2017.

The survey looked into cybersecurity issues of 2,000 participants from the Canadian business community. The results revealed that 32 per cent of users had released data in response to a phishing scam.

In addition, 19 per cent of companies were the targets of ransomware attacks. However, the survey also noted that 36 per cent of respondents did not spend any money on security tools or protection.

Digital adaptation tips

The BDC has offered a few tips to help businesses successfully bring technology into their processes. These include:

Have a plan. Before bringing in any new technology, consider the problems that your company needs to solve. What are your production problems? How could technology solve those issues? These are questions that business owners should consider. It is also recommended to have a plan or strategy for implementing the technology including employee training.

Invest in technology gradually. Have a strategy for your business that brings tech tools in slowly over time.

Use data. Keep track of useful information and leverage it to make your business and customers better. However, it is important to be transparent with your customers about your collection and use of data.