A recent study suggests that the UK economy could benefit by up to £15.3 billion if SMEs introduce the use of digital technology, tools and connectivity within their organisation.
- £9.9 billion (or 0.5 per cent of UK GDP) could be added if SMEs improve their digital skills and their ability to use digital tools.
- £5.4 billion (0.3 per cent of UK GDP) could be added if SMEs improve their digital infrastructure, in the same way.
SMEs owners and top management must ‘adopt a genuine digital mindset to stay competitive in today’s modern landscape.’ If digital tools are introduced into their organisation, they will provide their employees with additional skills and confidence in the area.
One of the main reasons SMEs are not taking advantage of the current digital opportunities is due to the absence of knowledge, skills and experience amongst the owners and their employees.
Only 6.7 per cent of SMEs offer training to develop ICT/IT skills for their employees (in contrast to the 67.6 per cent of firms, with more than 250 employees who do). In addition, many SMEs state that it is not practical to invest in opportunities that are high-cost and have a long pay-off period.
A research paper, conducted by the Industrial Strategy Council, states that the UK regional productivity is at the highest level in over a century. The inclusion of digital technology is one of the main contributing factors.
SMEs without digital tools
The study suggests that 58 per cent of SMEs do not succeed within the first five years.
For example, businesses with more than 250 employees see a 25.4 per cent turnover from their e-commerce sales. SMEs only see 6.98 per cent, therefore embracing digital could be a significant factor for growth and resilience. The percentage of SMEs and large businesses that implement certain technology tools are as follows:
- Customer relationship management tools – 8.6 per cent (SMEs), 62.9 per cent (large businesses)
- Enterprise planning software – 5.2 per cent (SMEs), 67.2 per cent (large businesses)
- Websites – less than half (SMEs), 95.6 (large businesses)
Benefits of digital
There are numerous benefits of adopting digital tools within your organisation, which will enable you to run your business more efficiently. Being able to easily access your data digitally means you can make more timely and informed decisions, which keep up with the shifting market conditions. It also means you will have a better back up recovery.
Making Tax Digital (MTD) for VAT
All VAT-registered businesses with VAT-able sales above £85,000 (current annual threshold) are required by law to be compliant with HM Revenue & Customs (HMRC) MTD for VAT. This means keeping digital records and filing digital returns through software that is compatible with MTD on a quarterly basis.
Benefits of MTD:
- Registering for MTD with HMRC means you will soon be completely compliant with the tax filing obligations
- VAT returns can be filed a lot more efficiently and quickly
- Having all your accounts up to date in accounting software will provide clear visibility of how your business should be performing
- Enables you to make well-informed decisions in the future
- MTD is the first step towards full digitalisation of tax in the UK
For more information and advice on how we could help your business implement digital tools, please contact our expert team today.