A report from the Enterprise Research Centre has contested claims that small and “micro” businesses are a drag on productivity, suggesting instead that their emphasis on technology is an asset.
There remains division between older businesses with high turnover but rigid ambition, compared with the smaller firms who have the courage to pursue risky but innovative projects. Protestations have been made that firms with fewer than ten staff, or “micro businesses”, are somehow hurting the economy through their limited access to expertise. This new report has disputed this sentiment, with the SME organisation urging instead that by making use of five key technologies, these micro-businesses have the potential to boost output by £16.6 billion.
The study insisted that the utilisation of digital tools could have a dramatic effect on sales, with both “cloud-based” services and “customer relationship management” software leading to a 13.5 percent and 18.4 percent sales rise respectively. There remains a digital deficiency amongst many older businesses in the UK, with some business owners unwilling to spend money on new technology or on hiring new staff to operate it. While this attitude protects cash flow in the short term, the so-called retail apocalypse and the tough competitive market emphasises the dangers of falling behind rivals.
At the Credit Protection Association, we always urge our Members to adapt to new technology as we have witnessed the competitive nature on the high street and know our Members need the tools to fight back. We are approached by a variety of different businesses, from the smallest to the biggest, and size has not negated the risk of distress. The combination of our debt recovery and credit management services ensure our Members have the cash flow to purchase new technology, as well as the credit rating to sustain it.
Stephen Roper, director of the Enterprise Research Centre, said: “There’s a clear ‘digital dividend’ for the productivity of our smallest firms from adopting certain technologies and these effects increase with the number used.”
However, a quarter of Britain’s micro-businesses make no use of digital technologies at all. A further quarter makes use of only one such tool.
Professor Roper said that policymakers should take note of the untapped potential of micro businesses. “Micro businesses play an important role in all of our lives,” he said.
“They are our plumbers, our builders, our hairdressers and our mechanics. By rooting business support and public information campaigns in the evidence, policymakers can help these firms to raise their productivity and have a major impact on the prosperity of UK plc.”