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SMEs ‘missing out’ on Benefits of Online Technology

The internet and new technologies offer a wealth of opportunities to small firms, but many are failing to take advantage and are missing out on economic returns of around £18.8 billion as a result, according to a new report.

The study, which was conducted by the Broadband Stakeholder Group (BSG), highlighted that both small businesses and super-fast broadband are key to the UK’s economic growth. However, if the nation is to see a return on the investment put into fixed and mobile broadband in recent years, small businesses need to be persuaded to make best use of the technology.

Currently, the vast majority of SMEs (92%) have access to the internet, while 71% have their own website. However, many companies are not using their broadband connectivity to its full potential, for example, providing online training to improve workers’ skills, improving productivity by adopting new technologies and expanding their client base by conducting transactions online.

After conducting interviews with a number of SMEs, the BSG concluded that many smaller businesses struggle to understand exactly how harnessing online technologies could be beneficial to their business, while a number were also nervous about adopting new web-based applications as they thought they would be time consuming and costly to implement.

How can the problem be solved?

The BSG makes a number of recommendations in its report about how the Government can encourage small businesses and entrepreneurs to makes the best use of broadband and technology.

Firstly, it suggests that the Government needs to collect more information on SMEs’ online activities so it can determine what areas need to be targeted for improvement. It is also key that both the Government and industry gain a better understanding of exactly what small businesses require from the internet, in terms of bandwidth and other characteristics, so they can ensure that services provided are meeting business requirements and make more resources available to help local authorities with broadband implementation.

It is also recommended that the Government incentivise smaller firms to use the web in a bid to drive up usage, for example by offering money off VAT returns which are submitted online, and set up an online platform highlighting the benefits of broadband and digital solutions with a view to encouraging more firms to take part in online activity.

BSG chief executive officer Pamela Learmonth said: “Whilst tackling infrastructure issues is costly and time consuming, understanding usage of infrastructure and communicating the benefits of doing more online is arguably even more challenging.

“Given the high importance of capturing the economic benefits from both private and public investment in broadband, we hope this report is a useful input, building on existing initiatives to ensure the UK’s small and medium enterprises really do capitalise on the connectivity available to them.”