Lack of digital skills is killing off startups, reveals Rakuten survey

Small to medium-sized enterprises (SMEs) in the UK are being killed off by a lack of digital skills, according to research by internet service firm Rakuten.

The survey showed owners of online businesses believe a lack of technical ability is second only to a lack of funding as the biggest problem faced when trying to start a digital business.

Two-thirds of new businesses try to target new markets but many are stopped short by a lack of technology skills, which prevents website adaptation or setting up new payment models, the research revealed.

“The online explosion may have removed many of the traditional barriers to entry for startups, but it’s clear they still need solid advice and the right capital partners to get their ideas off the ground,” said managing partner of Rakuten's Fintech Fund, Oskar Miel.

Half of online business owners think small online companies are more likely to fail than physical startups, and many do not know how to properly utilise online tools to drive their business forward.

Many startups are having to turn to digital technologies to help them succeed, and more than a third of online startups think cloud hosting services are the number one driver for digital innovation for their online businesses, with social integration and mobile closely following.

Heikki Haldre, founder of online virtual fitting room Fits.me, said that having access to people with digital skills ultimately helped drive his startup to be more competitive in its space.

“As an online entrepreneur, working with people that had strong digital skills was critical for the success of my startup,” he said.

“Being able to call on digitally skilled people that are familiar with technology and social media developments meant my business was resilient and could adapt fast to changing trends.”

Haldre also emphasised there should be a greater emphasis on digital skills in education across the UK to help drive the economic benefits that could be found in this space in the future.

A lot of startups feel there should be more government involvement, with 90% claiming the government should be doing more to support online entrepreneurs.

The government recently introduced a scheme to allow highly skilled IT professionals to gain an IT startup visa to work in the UK, both to encourage technology startups and to fill the skills shortage that is currently growing throughout the IT industry.