Four ways to go digital as a small business

When businesses embrace all that digital technology has to offer, they amplify what’s possible. And even the smallest of steps can make the biggest difference. Simple switches to digital tools like adopting online project trackers, cloud accounting platforms, and customer service channels can radically improve productivity and revenue-earning potential. But why do many small businesses still hesitate to take up new technology?

In Xero’s One Step report, it was discovered that small businesses which readily adopt new technologies will, on average, gain 120% more in revenue and 106% higher productivity than those who don’t. Yet among Aussie small businesses, almost one in three still delay making any decision on new technology, compared to just one in five who count themselves as confident digital adopters. That’s a substantial adoption gap, and one that’s potentially costing our economy — where small businesses make up almost 98% of businesses — a considerable sum in lost opportunity.

So what is it that’s holding small businesses back?

Breaking down barriers

Using behavioural science techniques, Xero’s global research discovered three common mindsets that restrained small business owners from embracing new technology.

Across the globe, small business owners often experienced strong resistance to change. Many felt that although going digital might make things better; their current solutions were good enough and not worth altering. Aussie small business owners are particularly likely to feel reluctant changing things they’ve been doing from the very beginning, as well as putting off decisions on new technology due to a perceived lack of urgency.

However, when they did consider new technologies, many tended to fixate on risks or short-term losses. This was especially notable when, as is the case for most Aussie small businesses, they felt as though they lacked sufficient support from business leadership. And once they started evaluating different options, the sheer variety of choices in the market often caused them to freeze at the final decision-making stage.

If you’re a small business owner, you might be wondering: how can I overcome these mindsets? The good news is that bringing down behavioural barriers can be easier than you might think.

Four ways to embrace new technology habits

1. One step at a time

   Perhaps the most effective strategy is to start with baby steps. Many of the behavioural barriers to technology adoption stem from small businesses perceiving “going digital” as an all-in, big-bet kind of process.

   So instead of focusing on high-impact, high-risk initiatives, try investing in smaller incremental changes — adopting an app, for example, rather than migrating your entire operations system onto the cloud. This gradual approach to technology adoption makes the perceived costs and risks much more palatable to our minds, as well as helping to beat nerves when it comes to change.

2. Do the math

   Another helpful approach involves quantifying the differences between adopting new technology and sticking to what you’re familiar with. Our brains tend to amplify potential negative consequences and downplay potential benefits. So something as simple as applying a more objective lens to technology choices can actually help remove much of the fear and doubt. Similarly, calculating the actual gap between how your business might operate with and without technology can help dispel the natural bias towards staying within your comfort zone. 

   If you’re a small business owner, consider using a tool like a cost-benefit analysis. This offers a simple framework to help clarify the real differences in risk and reward, or action and inaction, when you’re struggling to make a decision. 

3. Cut down on choices

   More options aren’t always better. In fact, an oversupply of choices tends to paralyse our decision-making capabilities. Narrowing the number of options on the table, or simplifying how you assess the various choices out there, can help in making decisions.

   That might mean establishing stricter criteria that weed out as many options as possible. Or it might mean using tools like a decision matrix to better visualise and objectively compare the pros and cons of various solutions, on an “apples to apples” basis. One surefire tip: ask vendors to only suggest one option, instead of getting caught up in a whole variety of solutions.

4. Lead by example

   Many small businesses struggle with seeing the relevance of new technologies to their unique situations. One way to overcome this barrier: seek out other business owners who’ve made technology work for them. Checking out case studies, joining relevant small business forums, and simply talking to successful technology adopters can help small businesses reframe digital transformation as something that’s not only beneficial, but normal.

   Wherever possible, look for those who share similar industries, situations, and motivations. For example, more than nine in 10 Aussie small business owners do what they do to spend more time with family. If that describes you, stories from founders who’ve managed to unlock more quality time through the use of technology are more likely to resonate with you than more profit-driven examples.

Sometimes, being set in our ways can hold us back from achieving brilliant things. This isn’t only true about technology, but just about every aspect of doing business (and life in general).

For Aussie small businesses looking to grow in the year to come, it’s time to think differently about risk, reward and change. One step might not seem like much when it comes to technology adoption, but it can be the start you need.