The Importance of going digital for SME’s

SME’s have had or will have to rethink their business models in order to overcome the current crisis of 2020 and similar future situations.

When it comes to SME’s adapting to the events of 2020, governments have played a key role in them weathering the storm with unprecedented support at a larger scale than in the aftermath of the 2008 financial crisis. SME’s must realise that these are temporary measures and digital transformation (DT or DX) is the key to surviving the current and future crisis.


Why Go Digital?

An SME can vary in size, industry, and level of experience, no matter, digital is proven to be a key advantage during this time digitisation and adopting digital tools can help them reduce costs, standardise and automate business processes reducing the reliance on manpower (in some aspects), enhance competitiveness, understand consumer behaviour and it enables SME’s to transform and compete at a larger scale and reach global markets by doing business online.

SME’s role in digital transformation

SME’s need to rethink and redesign their business with the focus on how to leverage their website, SEO, mobile connectivity, data analytics, cloud computing and incorporate these tools into the overall business model in order to deliver value to customers and ensure business continuity and business sustainability.

Given the way that consumers shop is changing, it has never been more important for SME’s to get online. A survey by website builder GoDaddy1 stated that a fifth of micro-businesses said they had gone online for the first time during the lockdown and almost half that their use of digital and social media tools had increased during that time.2

Implementing certain digital strategies and the use of some digital tools that can change and enhance how SME’s do things internally. For instance, the ability to report speeding up the time it takes for owners/leaders to receive critical business information and reallocating resources to fund new initiatives, attract/retain new customers and gain a competitive advantage over competitors.

Case studies

Knoops

For some SME’s, e-commerce has always been part of the plan. The artisan hot chocolate company Knoops opened its first store in Rye, East Sussex, in 2013, and opened a London store in Clapham Junction in February 2020, with more planned. According to Head of Marketing Anna Chapman, having an online presence was always a key part of the company’s strategy3. Chocolate has a broad appeal, and they wanted to be able to reach people in their homes, especially those who didn’t live near to their stores.

The company’s website centres around its hot chocolate maker, the Knoopifier, with owners getting access to online subscriptions for pouches of “Knoopifier” chocolate buttons delivered to their home. The website had always been an important part of the company’s strategy, but lockdown emphasised this further.

While their doors were closed, adopting digital was the only way they could generate revenue. They were able to focus their efforts entirely on their website and social media channels. The current situation has been an extremely stark reminder of the importance of SME’s adopting an omnichannel approach.

Toast

For other SMEs, while a website may have been part of their business, using it to sell has been a recent addition. Toast Ale, a craft beer brewer that uses bread waste, stated that despite having an online presence, it wasn’t really part of the business’s strategy.4

They focused on building their brand online, their routes to market were bars, pubs, restaurants and retail – 70% of their business was on-trade, about 30% was in conventional retail environments, and a fraction of a per cent was online.5

With those sales channels cut off during a lockdown, Toast Ale, which donates its profits to sustainability charities, was forced to shift its sales online. They started to rebuild their website focusing on a more functional online shop. This transformed their business and helped them to survive; how? – it became a huge opportunity to reach new audiences. It was not considered to be a sales channel before, however now the company sees its potential.

Magpye

Vegan pie business Magpye, hadn’t explored e-commerce, instead of selling pies from his converted horsebox at events and supplying local pubs in the north of England. Having a full calendar of events booked. They were supplying pubs with pies and had just expanded, dropping off to four or five pubs twice a week. Then their income stopped.

Like Toast Ale, Magpye realised quickly that they would need to shift to e-commerce the effect has been positive in that a wider audience could now see their products rather than just the pub that they delivered to.6

Adoption of digital solutions make information more easily accessible and it should be an opportunity, not an obstacle. SME’s should be fleet of foot to adapt very quickly and potentially take market share of the larger established but less agile organisations and corporations that may be stuck in their ways or who have simply become complacent.

SME’s are more susceptible to changes in the market especially the unique one that 2020 has presented. What the examples of Knoops, Toast Ale and Magpye have exemplified is that adoption of new technology has given them the ability to reach new audiences and adapt to extreme market conditions.

Significant lessons can be drawn from the steps some entrepreneurial start-ups and SME organisations have already taken during 2020. There are two which stand out.

Tactical learning – both tactically when making specific business changes, it is key that businesses understand which technology to introduce, and how, with the right employees with those skills in place.

Organisational learning – understanding how to manage change at a pace that far exceeds prior experiences). Both types of learning will be critical for SME’s (as well as large corporations) going forward since the pace of change from 2020 is not likely to change.

What is apparent is that the agility of the company and its ability to adopt a new method of doing things; using technology to adapt in a climate of uncertainty is critical. It requires ingenuity and being able to pivot quickly and even experiment with things that have never been done before. Adoption of new technology (where applicable), with the right skills (in-house) and buy-in to implement it effectively, can give SME’s the ability to reach new audiences and adapt to market conditions.

Part 3, we will be looking at: DT/DX is about talent, not just about the technology

References:

1. Tech Radar (April 24, 2020, By Rob Clymo). Covid-19 forces micro-businesses to innovate during the lockdown: New survey suggests micro-businesses are more resilient to Covid-19 crisis than expected [online]. Tech Radar [Viewed 7th December 2020]. Available from: https://www.techradar.com/uk/news/covid-19-forces-micro-businesses-to-innovate-during-the-lockdown.

2. Ibid.

3. Ibid.

4. Ibid.

5. Ibid.

6. Ibid.