For the last few years, business analysts have been urging small businesses to embrace new technologies if they want to grow, thrive or even survive. Back in 2013, Microsoft commissioned The Boston Consulting Group (BCG) to carry out research across five major countries to see what’s currently driving the growth of small businesses. Analyzing a number of variables, the BCG study eventually concluded that there was a strong correlation between “the adoption of advanced information technologies on the one hand and growth in revenue.”
Focusing on small business “leaders” (those who are willing to innovate in order to grow their business), BCG identified three growth drivers:
Using Tech to Become More Efficient – Scalability has always been an issue for small businesses, but BCG’s research has shown that more companies are now harnessing custom spreadsheets and administration tools to manage their staff. Additionally, the use of big data is also helping small businesses build up a better picture of their potential market and refine their services accordingly.
Online Networks for Greater Flexibility – Another reason small businesses have been able to thrive thanks to modern technology is through cloud services and networks. Backed up by a separate study by Deloitte which concluded that cloud services are the key to small business growth, BCG found that companies that utilize solutions such as infrastructure, platform and software as a service (IaaS, PaaS, and SaaS) are able to build scale without large capital expenditure.
Online Tech-enabled Business Models – Small businesses are now able to refine their business models by targeting customers in a more specific way using Google data analytics location services. Moreover, by launching online services, small businesses have also been able to adopt the “freemium” model in order to build up a customer base which can then be monetized.
The State of Small Business
So what’s been the result of this small business tech revolution?
According to the latest statistics from the British government, more than 600,000 start-ups were launched across the UK in 2015. Following on from a bumper year in 2014, during which 581,000 new businesses were registered with Companies House, the government was once again pushing more entrepreneurs to chance their dreams and set up their own business.
Indeed, thanks to initiatives such as Startup Britain, whereby small business owners can borrow up to £25,000 ($35,400) over five years at an interest of 6% (thanks to a government fund of £310 million/$439 million), the growth of the independent trader has been impressive in recent years.
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Beyond the UK, it’s the same story in the US with independent traders springing up across the country to take on the major corporations. The US Brewers Association American craft breweries now sell more than 16 million barrels of beer each year (outpacing Budweiser), while the American Booksellers Association finds sales by independent bookstores in the US have increased by 27% since 2009.
Unsurprisingly, the small business boom is also apparent in Australia. Thanks to AU$20 billion fund from the Australian Federal Government, small businesses earning less than AU$2 million are now gifted a 1.5% tax reduction (taking the rate to 28.5%), moreover, business owners can also claim back 15%-20% of any asset purchased for less than AU$20,000.
This economic swing towards small businesses was reflected in the 2015 report by the Australian Bureau of Statistics (ABS) which stated that at the end of 2014 there were more than 2 million active businesses in Australia, with 20,496 being added since June 2013. And, of the active businesses across the country, 97% were classed as small businesses.
Small Business Owners Now Testing their Skills
Taking the findings of the BCG study and looking at the growth of small businesses in the UK, US and Australia, it’s possible to pick out two main innovations that have helped fuel this growth. Also identified by BCG and Deloitte, cloud services have given small businesses more ways to grow, but alongside these services there’s been a general increase in awareness among entrepreneurs when it comes to knowledge.
Indeed, there are number of companies now giving potential entrepreneurs a simple and efficient way to see if they’ve got everything in order before they embark on their business venture. By taking the Hiscox Small Business Quiz, entrepreneurs can get an acute insight into their strengths and weaknesses when it comes to business.
Crafted through a collaborative process, the test covers all the main areas of the business world, including strategy (with help from Incite), marketing (help from Luan Wise) and Law (help from Keystone Law). Using this resource has allowed prospective business owners to understand their strengths and weaknesses and make the necessary adjustments before they invest time and money into their project.
Way Up in the Clouds
As we’ve mentioned, the other driver for small business growth around the world is cloud services. According to research conducted by Konstantinos Giannakouris and Maria Smihily on behalf of the European Union (EU), 19% of business across Europe used cloud services in 2014.
Surveying 1.5 million companies (83% were small businesses) across 28 countries, the study found that countries such as Finland have cloud usage rates of almost 50%. Of those that use cloud services, 46% do so to manage various aspects of their business, including data storage, accounts and customer relations.
According to Business Insider, cloud computing will be one of the biggest small business trends in Australia in 2016 as these companies are now outpacing larger businesses when it comes to new technology usage. In fact, along with beacon and location services, small businesses are now able to more accurately target customers and store their data more easily. A virtual data room or Dataroom is a cloud solution especially made for the secure storing and sharing of confidential business information. Data rooms offer specific sets of features such as advanced permissions, Q&A tool, notes and bookmarks, as well as multiple factor authentication and watermarking.
Small business is now big business for many governments around the world and, as technology continues to improve and more tax breaks are offered, it seems as though this trend will continue well into 2016.
We’ve partnered with the Hiscox Small Business Quiz to share this research with you.