Britain’s 5.5 million-strong army of small businesses are gearing up to make major investments in tech as part of plans to accelerate growth and improve customer experience.
According to a survey from American Express, a third of independent retail and hospitality business owners plan to introduce new technology while more than one-quarter (26%) plan to ramp up sales and marketing activity.
Just under a quarter said they intend to bolster their marketing capabilities in a bid to unlock additional consumer spending.
The move comes amid a challenging period for many firms across the UK, with more than a quarter of revealing that attracting new customers is a key challenge.
Around one-third said they plan to improve customer experience this year, with technology likely to play a big part. More than two-fifths (43%) said they had beefed up technology investment ahead of the festive period in order to create a better CX.
Despite ongoing challenges, small businesses are upbeat about growth prospects in 2024, with 89% expecting to grow over the next 12 months; 93% also said they feel confident about the future of their business.
Amex general manager, UK merchant services Dan Edelman said: “It’s encouraging to see so many of the UK’s small retailers entering 2024 with an optimistic outlook.
“However, they know that they can’t stand still if they want to grow their business. Investing in new technology unlocks operational efficiencies, frees up valuable resources, and ultimately improves the customer experience.”
Nearly 80% of small business owners agreed that collaboration between local community businesses had increased over the past year, with three quarters agreeing that it is important for SMEs to team up to navigate the current economic climate.
The study coincides with the publication of separate research from small business platform Xero and economics consultancy The Centre for Economics & Business Research, which suggests UK SMEs could generate £77.3bn in additional revenue and create 885,000 new jobs if they digitised at the rate of the top 20% of tech adopters.
Those SMBs that had digitised significantly over the past four years grew revenue by 8.1%, compared with the slowest adopters, who saw revenues decline by 4.7%.
However, four-in-ten small businesses said they fail to see the relevance of new technologies to their company, with a similar number believing that tech investment will not deliver value for money.
The main hurdles to increasing tech adoption are a lack of knowledge or skills, cited by one-fifth of respondents. A lack of “clear expectations” and an inability to prioritise the right tech also holds companies back, the study found.
Xero UK managing director Alex von Schirmeister said: “This nation’s army of tiny firms already pack a punch, contributing billions to the UK economy and creating millions of jobs. But they have a different relationship with technology to larger SMEs, often without dedicated experts on hand to support adoption.
“The smallest firms suffer from a ‘digital drag’ where concerns over technology can suppress the transformational benefits to them. With the right guidance and support, these businesses could fuel even more economic growth and reach new levels of success with technology.”
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