The UK’s small businesses are struggling to keep pace with the growing digital demands, according to a new report from Lloyds Bank.
The Bank’s UK Business Digital Index shows that two in five SMEs lack basic digital skills, but a growing number are using digital strategies to cut and control costs.
“The Index figures are compelling,” the report says. “And, while the analysis shows an increase in overall digital capability levels both for small businesses and charities, there are still a staggering 1.44m small businesses and 98,000 charities without Basic Digital Skills.”
65% of small businesses that responded to the survey say they have used digital to cut costs. And it’s not just cost control: “The most digital small businesses are now more than twice as likely to report an increase in turnover than the least digital (64%). Furthermore, three in five of the most digital have seen an increase of more than 20%.”
Interestingly, it seems that those small business that have dipped their toes in the digital pool are tending to use social media as the principal channel, rather than a company website. 45% of small businesses report creating social media communities in 2016, vs. 27% in 2015, according to the report.
‘More support needed’
As part of its call to action, Lloyds says that SMEs need help to underpin their digital development: “Any formal or informal support should include cyber security as a key skill. Understanding how to use digital safely and the associated benefits will encourage organisations to do more online,” the report, which can be viewed in full here, said.
Lloyds also suggested that businesses that embrace digital strategies may benefit from a competitive advantage when it comes to exports. “The analysis suggests there is a significant opportunity to do more overseas by using digital,” it says, before suggesting that more help is needed for these exporting SMESs. “Organisations need support and guidance to help them reach new markets. For example, the Department for International Trade and Lloyds Banking Group are developing an online International Trade Portal to help organisations take their first steps.