Digital transformation tips for small businesses


Technology offers lots of opportunities for small businesses, but it can be daunting to work out what could support your business and what could prove to be an expensive, fiddly waste of time.
How can digital technology help small businesses, and what are the main opportunities and risks? Whenever you adopt a new technology, it’s worth considering how it could impact your insurance for commercial businesses.

The appetite for technology in UK small business 

A recent survey found that the Covid-19 pandemic has increased tech demand from small businesses. Research from Small Business Britain and Lloyds Bank Academy found that almost two thirds (60%) of small businesses want to use tech to support their marketing and sales in recovering from the pandemic.
Almost half (48%) of small business owners said they wanted to improve IT skills, 60% aim to improve their social media presence and 56% want to boost digital marketing. Just over half (51%) of small businesses said they wanted to improve their search engine optimisation and 39% wanted to improve their e-commerce offering.
Michelle Ovens, founder of Small Business Britain said: “The economy is going through a huge transition and the pandemic has prompted a major rethink amongst businesses on how they run their businesses.
“This presents a major opportunity for the UK’s small businesses to be at the heart of the recovery, but we need to support them to do it by continuing to give them help to grow their skill and insight.”
The pandemic has been a particular tough period for small businesses, who have had to adapt to different ways of working and periods of uncertainty, often with minimal funds to assist with this transition. According to a poll of over 500 UK SMEs, 47% had suffered significant loss of earnings as a result of the pandemic.
Despite consensus on technology being part of the solution to these challenges, one in three (32%) of business owners said they did not know where to get help with the digital transition.

What is digital transformation?

Digital transformation is not just about applying technological solutions, for example by using new software or buying new equipment. Digital transformation is about using technology, people and processes to fundamentally change how your business performs.
Technology can not only improve how an existing process is carried out, but transform an entire business model. For example, supply chain management technology has not only made it easier for retailers to know what’s in their warehouses and what stock needs to be re-ordered.

This technology has facilitated an entirely different business model that helps to predict demand more accurately and refine logistics. Love it or hate it, Amazon is an example of how far this approach can be taken.
Digital transformation moves IT from being an on-call service that helps to patch up your systems or fix broken devices to being integrated into every area of your business.
A man in an office talking on a phone whilst typing into a computer

How can small businesses start their digital transformation journey?

Before you start investigating solutions, it’s worth taking the time to analyse your organisation’s problems. Digital transformation is not something that can be achieved overnight. It takes time to go through the journey, and you will need a strategy or roadmap to get there in the smartest, most cost-effective way.
First, let’s think about what digital transformation really means. Cisco’s guide might be a useful reference point. A non-digital small business may be reactive, dealing with issues from day to day without much overview of how improvements could be made. The company may be using manual processing for things like payroll and invoicing. It will not be using cloud technology, perhaps still relying on basic spreadsheets and staff will lack up-to-date IT skills.
A company that has matured in its digital transformation journey will have a strategy to promote innovation and expand operations which is fully informed by developing market conditions. It will have automated processes and use cloud technology and analytics to be as efficient as possible. The company will have access to key tech skills and know-how.
If the idea of a full digital transformation sounds daunting, you’re not alone. Only a very small proportion of small businesses have full digital maturity, but it’s clear that tech is going to play an intrinsic and essential role in the future of businesses of all sizes. The key to getting started is to keep coming back to your business objectives. Digital transformation should help you to deliver your objectives better. If you keep this as a central focus, you shouldn’t go too far wrong.

What can digital technology do for small businesses?

There is no area of business that cannot be assisted with technology. Here are some examples of where technology could help your business grow:

  1. Cloud solutions

You are probably already using some form of cloud solution - online storage such as Google Drive and DropBox are examples. If you’re not familiar with the concept of the cloud, it basically means that someone else handles the hardware side of computing for you, so you do not need to have any servers or other tech stored on your premises. Instead you can hire storage or use applications that are based elsewhere. Economies of scale make this a cheaper option with plenty of flexibility to scale up or down as you need it – for example, if your business has seasonal fluctuations of trade, you can factor this in rather than paying for more than you need in your quieter times.


  1. Communication tools

You can only do so much with email and phone calls. As remote working is increasingly the norm for many industries, ensuring effective communication when you are not face to face can be a challenge. Tools like Google G Suite or Microsoft Teams allow you to share, manage and edit documents remotely, as well as communicating with team members through chat or video call.

  1. Project management

Managing a team remotely can be challenging. When you’re face to face you can often pick up on progress, spot problems or identify ways to improve but when teams become remote it is much harder to monitor progress. Project management tools like Asana, Atlassian, Slack or Trello allow you to manage projects remotely, assigning tasks, managing workflows and keeping a handle on whether you’re on track to meet deadlines. These tools can cut down on the need for meetings, so your workers can use their time more productively.

  1. Cybersecurity

Every business these days uses computers and handles sensitive data such as customer names, address and bank details. You need to think about cybersecurity, and it should also be factored into your digital transformation plans. Cybersecurity is not just about how and where your data is stored, but also human security such as using multi-factor authentication, employee awareness about cybersecurity, using strong passwords and encrypted VPNs.

SMEs in the UK experience around 65,000 cyber attacks each day, of which around 4,500 succeed. As the pandemic has pushed more small businesses online, these companies can be easy pickings for criminals. The consequences of a data breach can be severe: 44% of consumers say they would stop using an online retailer if they knew a breach had taken place. Your commercial insurance should always provide protection against this type of risk.
A hand behind a graphic of a padlock stating cyber security

  1. Customer Relationship Management (CRM)

A CRM tool enables you to meet customer needs and analyse data that helps you to understand your business more clearly. CRM can assist with sales automation, customer retention, and marketing. You might want to explore a digital CRM solution such as Salesforce or Hubspot – there are lots of different solutions out there to suit all budgets.

The benefits of digital transformation

In terms of the benefits of digital technology for your business, these are many. The most obvious have been underlined by the pandemic: enabling remote working and minimising face-to-face contact. But this is far from the whole picture.
Digital transformation can help your business go paperless, automating lots of those back-office tasks that sap working hours away or keep you at your desk long into the evening. By bringing important documents and information into an online location, you can search through documents, communicate with clients, and organise meetings or issue invoices without having to hunt through a pile of paperwork.
Automation not only saves you valuable time, it can help to boost your staff morale because frankly, data input is nobody’s idea of a dream career. Automation also reduces the risk of human error, which is responsible for many costly and embarrassing mistakes. Check if these kinds of breaches are covered by your commercial insurance policy.
Faster internal processes can reduce your costs and help to make your business leaner and more agile. If your business operates on multiple sites, you can share data seamlessly and instantly.
Another key incentive for small businesses to embrace digital transformation is the do or die element – if your competitors adopt technology that makes them leaner, more efficient and more responsive then your business could be squeezed out of the market. There’s no time like the present to consider your options and start developing your business for the new normal.

The challenges of digital transformation

One of the main challenges facing small businesses is knowing what technology could help, and which innovations would be a costly project that would not contribute anything tangible. Another common problem lies in implementation; a solution could be exactly what a company needs, but if employees do not understand how to use it, the benefits will not be realised. 
Scalability is another challenge. Hopefully, your business will grow over the next few years – how can you be sure that the solutions you implement today are suited to your business needs in five years’ time? What if your business faces a setback and you’re left paying out for a tech solution that you no longer need?
With careful planning and attention to the detail of any service contracts you enter, you should be able to manage this risk. For example, cloud services should be scalable to ensure they can be tailored to meet your changing needs.
It’s important to remember your business’ individual strengths when you’re planning to implement technology. Small businesses tend to be good at the human side of things; dealing with customers directly, giving them a sense that you know the business inside out and will deliver a good service.

It is vital not to lose your local identity and connection with customers. Using technology doesn’t mean you have to become like a large, faceless corporation. You should be able to use the time saved through automation to give customers an even better, personalized service.
According to a Cisco survey, the main barriers to UK small businesses embracing digital technology are lack of skills (15%), cultural resistance to change (15%) and lack of commitment (14%). The most common technology investments are cloud services (13%), hardware upgrades (13%) and customer experience solutions (10%). It is estimated that digital transformation could boost British small businesses by $202 billion (£145 billion).

Finding support with digital transformation

If you’re not sure where to start with technology, don’t worry. Everyone has to start somewhere – carrying out some research into what solutions are out there and how they have benefitted other businesses can be a real eye opener.
Depending on the nature of your business, you might be able to access support through a government scheme such as Made Smarter. The Federation of Small Businesses runs regular events and campaigns around digital transformation for small businesses.
When your business is changing, you need to make sure your commercial insurance still meets your requirements. Insurance Choice offers flexible cover that is tailored to your needs. When you use more technology, it could reduce your risk in some areas and change or increase it in other areas – for example, your buildings cover might be reduced if you no longer have hardware on your premises, but you might want to boost your commercial insurance cyberattack protection.
Why not get in touch with Insurance Choice today to discuss your commercial insurance needs?

Policy benefits, features and discounts offered may very between insurance schemes or cover selected and are subject to underwriting criteria. Information contained within this article is accurate at the time of publishing but may be subject to change.