U.S. Small Business Not Digitally Engaged
From the Emerging Technologies Blog
by Kevin Coleman
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Analysis by a management consulting firm of small businesses within the United States and their movement to become digital has some surprising results. The analysis indicated that small businesses that embraced digital technology recognized some great benefits including.
- They had about 2 times the revenue per employee.
- They had revenue growth of nearly 4 times that of the previous year.
- They were nearly 3 times more likely to create jobs over the previous year.
Those are some impressive stats. However, that same report stated that nearly 80 percent of small businesses in the United States still fail to take full advantage of moving to digital. One has to question the logic of most small businesses in the U.S. not being digitally engaged. One has to wonder, why is that??????
Posted on: April 23, 2018 07:34 PM |
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Comments (15)
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Cost. Ignorance. Lack of professional advise.
Kevin Coleman
Subject Matter Expert, Author, Speaker and Strategic Advisor| - Insights
Pa, United States
@ Sante - any idea what that would look like in Australia?
Michael Delaney
Partner| Delaney Management LLC
West Chester, Pa, United States
Good question. I would need to ask what the definition of fully engaged may be. I suspect on an individual basis the members are the company are using technology at a high level. Getting a company wide technology plan usually takes a certain level of maturity
Kevin Coleman
Subject Matter Expert, Author, Speaker and Strategic Advisor| - Insights
Pa, United States
@ Michael - In this context it would be the using digital technologies to achieve significant (over 100%) improvements in revenue per employee, annual job creation and annual revenue growth over the previous year.
Kev, I think Australia has been pretty good at taking advantage of the digital age. Not sure where to find the stats on this though in terms of % adoption and success rates per the metrics you mentioned (ie. revenue per employee).
Rami Kaibni
Community Champion
Senior Projects Manager | Field & Marten Associates
New Westminster, British Columbia, Canada
Oh wow, very interesting. I have to check what it is like here in Canada.
I personally would take all those statistics with pinches of salt. What is not said seems more significant that what is stated.
"They had about 2 times the revenue per employee.": Is that an appropriate measure? Surely cost of operations (particularly fixed costs) being ignored here by the consulting firm is significant. With a smaller employee base, for one, the operating cost per employee would be more (and, thereby, the operating profit per employee would be lesser).
"They had revenue growth of nearly 4 times that of the previous year.": Wouldn't that be because they have a smaller base to begin with? If I sell one matchbox in 2017 and then ten matchboxes in 2018 - my revenue growth has increased tenfold. But is that growth really significant?
"They were nearly 3 times more likely to create jobs over the previous year.": Maybe, but against what base? On what parameter? And how many jobs are we talking about here? There is a lot left unsaid in this statement to make one uncomfortable.
Lastly - let us imagine a scenario where the quoted statistics are truly as impressive as they've been engineered to sound. Has an analysis been conducted to determine that these numbers are achieved despite not 'moving to digital' - or *because* they haven't yet 'moved to digital'? How much of a factor is their existing way of working in these statistics?
I wonder about Australia, It will be interested to know
Lenka Pincot
Chief of Staff to the CEO| Project Management Institute
Paris, France
I agree with Karan, there’s a bit of missing information here. Are those businesses really willing to grow? I know couple of people who are running small business in US who are one-man-show but that is their target. They are using social media and apps for electronic payments which sounds digital to me but indeed there is nothing automated. Could they be bigger? Yes. But do they want it and do they invest to achieve it? Not so sure. It would be helpful to break the numbers down at least by industry of those small businesses, by number of employees, to ask if they want to increase their level of digitalization and if they believe that digitalization is their way to grow.
Kevin Coleman
Subject Matter Expert, Author, Speaker and Strategic Advisor| - Insights
Pa, United States
One thing I agree with is that these stats make many people (business owners and executives) uncomfortable. I like trends over time. Showing the stats 4 years prior and then the year of the change. But, that is not how the management consultants reported the numbers. I will say nearly all the companies I have been involved with on the transition to digital has some fairly similar metrics now that I look back. I will have to say the concept of not wanting to grow is a foreign concept to most large management consulting firms that conduct these type of studies.
Lenka Pincot
Chief of Staff to the CEO| Project Management Institute
Paris, France
I understand, growth is a measure of success. But what about let’s say a teacher who is making cakes and selling them. It is her hobby and source of extra small money but not a business goal. Or a family run business which wants to stay just in the family.
But regarding the digitalization, what are the common metrics?
Kevin Coleman
Subject Matter Expert, Author, Speaker and Strategic Advisor| - Insights
Pa, United States
I don't think' sideline businesses' were included in the survey from the top management consulting firm. HOWEVER, they should have given some guidance as to the size of the small businesses used in the study.
Georgia Harris
GLH Project Manager| Independent Consultant
Pa, United States
A project I was on with a large consulting firm focused on small businesses. The consulting firm had a term for the executives of those companies that were not interested in growing. The term was RIP and that stood for Retired In Place.
I think we need to keep in mind some of the scenarios presented here are much more of a hobby for profit than a business. A top management consulting firm is NOT going to poll a business that is more of a hobby than a business for sure. I absolutely LOVE the 'Retired In Place' and that is not limited to small businesses. I know a few business unit managers and a few C level executives that fit into the RIP definition.
Annie Hayes
Lead Control Systems, Rail Technology Programme| BHP
Perth, Wa, Australia
Two links with some Aussie data:
Deloitte:
https://www2.deloitte.com/au/en/pages/media-releases/articles/google-smbs-2017-report-171017.html#
PWC:
http://www.digitalinnovation.pwc.com.au/small-business-digital-growth/pdf/Small-Business-Digital-Growth.pdf
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