Small businesses projected to add £1.8tn to global GDP growth by 2024
Small Business Digital Maturity research finds nearly three-quarters of global small businesses surveyed are accelerating their digitisation rates to address Covid-19 challenges and respond faster to the new normal of remote working
As companies of all sizes struggle to adjust to the new working realities of a coronavirus-defined world, in particular supporting remote working as a standard practice, research from Cisco has revealed that small businesses are realising that digitisation is no longer an option, but a matter of survival.
The 2020 small business digital maturity study was conducted during the pandemic to determine the readiness of small businesses to adopt key technologies, the impact of technology on driving economic growth, the opportunities and challenges they face, and the correlation between digital maturity and faster recovery.
It analysed data from over 2,000 small businesses across eight markets to assess the challenges and opportunities the companies face in their digital transformation journey in light of Covid-19. The eight markets include Brazil, Canada, Chile, Germany, France, Mexico, the UK, and the USA.
To understand the maturity level of small business digitisation, the Small business digital maturity study used a framework that helps small businesses clearly assess their current capabilities and understand where they are on a four-stage digital index – ranging from the earliest stage of Digital Indifferent to the most advanced group of Digital Natives.
When it comes to the four-stage digital maturity index, small businesses range with surprisingly only 25% surveyed in the most advanced stage (stage four) with 4% still in stage one.
Indicating the importance of the small business sector, the study estimated that small businesses could add $2.3tn (£1.8tn) to these markets’ overall GDP by 2024, while contributing to the economic recovery during- and post-pandemic. Together, the eight economies surveyed were found to be able to potentially also increase by 5.5%, and enjoy a 42% faster growth rate through increased small business digitisation.
In all, 70% of small businesses surveyed were accelerating their digitisation rates to address Covid-19 challenges, and the study noted that most digitally mature small businesses can respond faster to changing market conditions and grow their revenue.
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On average, small businesses in North America and Western Europe are more digitally mature than those in Latin America, with more than 33% of companies in stages three and four in both regions. Comparing the eight countries, small businesses in the UK, the USA and Germany have made the most progress in their digitisation journeys. France and Canada follow, while small businesses in Latin America lag behind.
When it came to recovery during and after the pandemic, small businesses that were in the more mature stages – three and four – have the highest ratio of recovering, are able to respond faster to changing market conditions and are growing their revenue at higher rates. It revealed that 16% of those surveyed say they are thriving and feel their businesses are agile and resilient.
Conversely, 36% of small businesses surveyed are still in survival mode, and half were focused on growing or rebuilding their businesses. Cisco said that if half of these small businesses surveyed could advance to the third stage of the maturity index by 2024, £1.8tn could be added to the GDP.
The study unsurprisingly revealed that the Covid-19 crisis has made small businesses more dependent on technology and aware of the importance of digitisation. About 45% of small businesses surveyed expect that over 30% of their businesses will be digital by 2021.
Again unsurprisingly, the research found that enabling remote working was indicated by businesses as the leading investment focus area for the next 18 months. Just over a third (36%) of small businesses are planning to invest in solutions that can help their employees work remotely, and a third said they will both invest in digital technologies to improve online sales and are planning to develop a digital strategy with clear business goals. The same percentage said they were investing in talent and the right skills.
When it comes to technology investment during the next 18 months, small businesses are planning to invest in cloud solutions, as well as build on-premise infrastructure – both software and hardware.
Security was critical for small businesses considering security solutions are part of their top three priorities, while customer experience and collaboration solutions are in the top five investment areas. The most mature small businesses were also prioritising artificial intelligence and analytics to drive further competitiveness and reduce human intervention.
