SMALL IN NAME ONLY: TECH TRENDS FOR SMALL BUSINESSES | A ZDNet Multiplexer Blog What's this?

Digital transformation for small businesses

The switch from on-premises and in-person business to contactless and virtual creates new opportunities for automation and growth.

When businesses shuttered and sent employees home after the pandemic hit in March 2020, Susan Mancall had a pit in her stomach. The owner of SKM Collection, a small, Boston-area fashion boutique, Mancall had a website, but she had done very little with it.

 "We were so busy with the business we ignored it,'' she recalls. "So we had no web presence and no ability to do direct selling." With two-thirds of her business gone, Mancall knew that if SKM wanted to stay in business, they had to move everything online. Within weeks, she had an e-commerce website and a new point-of-sale system up and running to get a better handle on inventory.

With a more robust website, "We realized we could reach customers around the country and we could show them products without having people come into the store,'' she says. Even now, with life returning to normal, Mancall says that having the ability to input sales data into the POS system has become invaluable.

Now, she and her husband, Matt, who also works in the business, are focused on developing a QR code that customers will be able to scan to buy merchandise directly from wherever they are. SEO optimization is another short-term goal.

"We pivoted early,'' Mancall says. "For years, everything was just about knowing what you had in the store, but now, with an online inventory management system, we have an online business and we know where items are at any given time."

Think Fast

The Mancalls pride themselves on reacting quickly, and they're right. If small businesses didn't realize it before the pandemic, digital transformation can be a lifesaver. Riding that wave, 58 percent of small and midsize businesses now have a digital transformation strategy and initiatives underway, according to a March 2021 report by the SMB Group. Of the SMBs that have accelerated technology adoption and investments, 42 percent are more likely to have increased their revenues since March 2020 than those who have decelerated investments, the report found.

One of the key findings in the report is that SMBs will reinvent their businesses for a virtual world. Cloud has definitely become the norm for most small businesses to do that, says Laurie McCabe, cofounder and partner at the SMB Group.

"When you go to the cloud for apps, you're immediately investing in creating a more virtual business,'' McCabe says. "Whether it's sales, marketing, or financials/accounting, people are starting to really understand if they're doing things in a more manual way or with old software that's not equipped for the cloud and isn't very collaborative, [their businesses will suffer]." These businesses may not stay virtual for the long term, "but they're going to automate those things and that means digitizing them."

That jibes with a recent report by TechRepublic, which found that SMB respondents were "cautious about embracing the benefits of SaaS" before the pandemic. Now, due to "the logistical and practical complications of a pandemic forcing their hand, SMBs have accelerated their efforts to deploy new hybrid cloud IT solutions," the report notes.

Push Comes to Shove

Digital transformation can be a challenge, though, if your business doesn't have dedicated IT staff. Or it may not be a priority for a company's decision makers if they are resistant to change.

That's something Cole Torres has seen on many occasions. Torres, an independent IT consultant for SMBs in Athens, Ga., says these companies are definitely lagging in digital transformations. "Typically it's because of the upfront costs,'' he says. "The smaller the business in employees and revenue, the harder each dollar is to project benefits."

Torres finds this to be the case even when he talks to business leaders about cost savings and productivity. "Being able to assess finances holistically and realize that that investment today translates into savings and productivity and increased revenue over time -- a lot of them just get hung up on day one costs."

McCabe thinks those barriers aren't as strong as they used to be. "What we saw during the pandemic is that push came to shove. You may have resisted doing a great e-commerce site … then you realized 'Oops, this is only way we're going to survive.'"

Many high-touch businesses suddenly found themselves doing experiential tours and offering virtual services last year – in some cases, overnight. Figuring out how to shift a business and keep employees working productively from home usually requires tech investments.

In fact, improving employee productivity was ranked the number-one driver (36 percent) of why SMBs invest in digital offerings, followed by keeping up with the changing customer (35 percent), improving external collaboration (34 percent) and keeping up with/getting ahead of the competition (28 percent), according to the SMB Group report.

New Standards for Customer Engagement 

With pandemic limitations lifting, many businesses are opting for a hybrid model and offering both onsite and remote work options to their employees. As SKM Collection's Mancall has discovered, there are a lot of benefits to doing things virtually, especially being able to expand your customer base and engage with existing customers more frequently.

With a digitized business, companies can "engage with customers more often,'' says McCabe. "Maybe I can't make that in-person workshop, but I can do a virtual one. You're just giving people more choices and opportunities."

For example, she points to all the restaurants that never had curbside pickup before. Many businesses have also begun using SMS texts to confirm customer orders and send notifications when they're ready.  

Another digital change SMBs are planning to make is to add no-touch payment/transaction options, according to the SMB Group report.

How to catch up

If you haven't started the process and aren't sure how to approach a digital transformation, McCabe advises that you think about the initiative as the catalyst for rethinking the purpose, structure, and culture of the business.

Other tips from McCabe:

·         Start by taking a fresh look at what's happening in the business environment. Zeroing in on specific issues and problem areas can help you set goals to sustain and grow.

·         Get input early and often from relevant stakeholders. Make sure to also involve employees who will need to adapt to new business practices and technology solutions. Also get feedback from customers and partners on where improvement is needed, how their expectations are changing, and how you can better serve them.

·         Assess your technology requirements. Will the technology you use today help you achieve your business goals, or will it hold you back? Look for offerings that automate repetitive processes and readily provide the data and analysis tools you need to make better decisions.

·         Think of cloud resources as your test bed for innovation. You can take new apps or capabilities for a test drive in the cloud before committing to full-scale deployments. 

·         Talk to peers in similar companies that are transforming successfully.

·         Keep the big picture in mind. While it's important to set priorities, you don't want to end up with a more modern—but still disjointed—set of siloed systems. Select technology from vendors that build their systems with open, flexible technologies so you can add new capabilities as you need to in an incremental, yet integrated manner.