Bridging the digital gap: How government and industry can empower SMEs through digital adoption

As part of Enterprise Nation's Tech Hub, we recently ran a roundtable event in Westminster. Joining small business minister Gareth Thomas MP, Kanishka Narayan MP and Allison Gardner MP were executives from leading technology companies, and small business owners to discuss how to drive SMEs' adoption of digital technology.

The attendees were:

• Gareth Thomas MP, small business minister

• Kanishka Narayan MP

• Allison Gardner MP

• Emma Jones, founder, Enterprise Nation

• Steve Young, senior vice president and general manager, Dell Technologies UK

• Brian Horsburgh, UK small business country manager, Dell Technologies UK

• Madeleine Hale, head of government affairs (UK&I), Dell Technologies

• Samina Hussain-Letch, head of industry relations and payment partnerships, Square

• Iana Vidal, head of UK public policy, Block

• Chantelle Devilliers, director of public affairs, Sage

• Michaela Neild, government affairs and public policy manager, Google

• Amy Anzel, CEO and founder, Hollywood Browzer Beauty

• Jayke Mangion, founder, Brickwood Coffee & Bread

• Rebecca Miles, co-founder, Nourish Communications

• Andrew Dick, managing partner, GW Dick & Co

Read on for a summary of what was discussed at the roundtable.

The government view

The MPs in the room said digital skills and technology are central to the government's mission to improve economic growth, with increasing the number of small and medium sized businesses adopting digital tools central to the UK's future productivity and prosperity.

The government will shortly publish its new small business strategy. As well as issues such as boosting local high streets, exploring export opportunities, and overcoming regulatory burdens, the strategy will include measures on improving digital technology adoption as a key capability for small business growth.

The government is receiving input on small business digital adoption from the SME Digital Adoption Taskforce. Enterprise Nation founder Emma Jones is a member. The Taskforce recently made recommendations ahead of its full report.

Small business challenges and how to overcome them

Business owners at the event highlighted several pressures which are taking their attention away from adopting digital technologies. Hospitality businesses, for example, are currently having to battle higher business rates, minimum wage increases, National Insurance hikes and cautious consumer spending.

Excessive and poorly designed regulations from government departments and local authorities were highlighted as a major barrier which is consuming valuable time and resources that could otherwise be directed towards growth and digital transformation.

Cash flow was another concern, exacerbated by lengthy payment terms from larger organisations. Business owners called for simplification in areas like VAT and a transition to e-invoicing which could be transformative for small businesses. A financial incentive for the adoption of real-time payroll information to improve cash flow management was also suggested.

The government is currently consulting on e-invoicing and Enterprise Nation has submitted suggestions.

One small business owner highlighted the challenge of sourcing skilled technology developers in the UK, which is forcing many SMEs to rely on overseas talent. The suggestion was made for the government to provide funding to support UK developers who can help small businesses improve their digital adoption.

The reliability and speed of broadband was raised by founders in the room. Even in big cities like London, small business owners said there are regular problems. Small business owners called on the government to work with internet providers to improve the UK's broadband infrastructure.

When it comes to improving small business owners' knowledge of digital technologies, one founder said "we often don't know what we don't know" and lack the resources or time to find the information needed. It was suggested that a "digital angel" scheme could be introduced to provide technology advice tailored to individual businesses.

The role of technology providers

The services provided by the technology companies in the room show that digital tools have a transformative power for small businesses, particularly with the emergence of artificial intelligence (AI). What was once a back-office function is now a central pillar of business success, offering unprecedented opportunities for automation, efficiency gains, data-driven insights, and enhanced customer relationships.

However, there are challenges hindering the pace of digital transformation for small businesses, with the technology providers acknowledging that they play a key role in overcoming them.

An example of how technology providers can help small businesses is Square's use of machine learning to provide lending solutions based on payment data. This has enabled more businesses, including a significant proportion of underrepresented companies such as those run by female and ethnic minorities, to access crucial funding.

Skills training is another area where technology providers can help. Google's recent report on the outcomes of its AI Works pilot, supported by organisations including Enterprise Nation, shows how training in AI can significantly improve the productivity and efficiency of small businesses and their employees.

Conclusion

While the potential benefits of technology for small businesses are clear, overcoming the existing barriers requires an approach that addresses both the immediate pressures faced by SMEs and the longer-term requirements for digital transformation.

A collaborative effort involving government, industry, and small businesses themselves, focused on building skills, simplifying processes, developing talent, investing in infrastructure, and providing targeted support, will be essential to unlock the full potential of digital technologies for the UK's small and medium-sized businesses.

About Tech Hub

A collaboration between Google, and Sage and built by Enterprise Nation, Tech Hub offers an accessible solution to support small businesses to adopt the technology they need to run and grow their ventures. Visit Tech Hub.