Small and medium-sized enterprises (SMEs) are vital to economic growth and the recent State of Small Business report from Sage and Nesta shows that entrepreneurial culture is booming across the UK.[1] However, despite rapid technological advances, average productivity levels are close to those of nearly a decade ago.

So; improved digital infrastructure is changing the way we do business in a seemingly more productive fashion but are we making the most of the tools at our disposal?

Digital communication, automated production and distribution, cloud-based admin and finance systems, the beginnings of machine learning and AI – the list is endless. These technologies correlate strongly with growth and productivity of businesses, regardless of their product. Applying technology to connect and bring efficiency to people, devices, processes and organisations is the accepted way forward. However, the high-tech software on its own is useless unless it’s powered by people (until we are comfortable with AI doing the job for us, that is). Lloyds’ 2017 report on the business digital index shows that a growing number of small firms and charities still lack even the most fundamental digital knowledge and skills.[2]

SME deficit in digital skills is estimated at 18.8 billion in foregone turnover

 Taking Advantage of Digital Tools

The task now for all of us is to catch up with the rapid technological advancement and develop our digital know-how.

While the report by Nesta and Stage highlights that on average small businesses are seeing their digital maturity improve, 38 percent of UK small businesses still lack basic digital skills and many are failing to take advantage of digital tools.[3] Digital exclusion among SMEs is estimated to cost £18.8 billion annually in foregone turnover.[4] Digital capability within SMEs also matters if businesses are to take advantage of digital infrastructure for communication, growing their customer base, tapping into international markets and working with other businesses. Research by Lloyds similarly suggests that highly-digitised small and medium-sized enterprises tend to grow at a faster rate than less digital-savvy organisations.[5]

The benefits are also seen in the third sector, with highly digital charities ten times more likely to save costs.

(Read more: Free Sage Cloud Business accounting software)

Digital literacy equals knowledge of digital tool and social engagement

Developing Your Digital Literacy

The State of Small Business report also highlights a shortage of specific technical skills required for working in an increasingly digital economy. In particular, certain coding languages and data analysis are skills which are sought after by organisations of all sizes. This causes startups and SMEs to disproportionately lose out on technically-skilled workforce as the talents are snapped up by larger firms. Combined with a lack of digital literacy among employees, this trend can hamper a company’s productivity and, ultimately, its growth.

One of the recommendations outlined in the report is to put a greater emphasis on improving digital literacy (not just infrastructure). The lack of correlation between digital infrastructure and productivity shows that technology in itself doesn’t bring about the positive impact if we neglect to improve our digital skills.

Digital Skills Training

Initiatives on a national and private scale such as Digital Business Academy and Google Digital Garage are there to support small businesses in their acquisition of digital skills.

The future of accounting systems for smaller entities is undoubtedly cloud-based. Since 2015, we have provided training for small businesses and charities to ease the transition from traditional desktop software (or no system!) to a cloud solution – Sage Business Cloud. If you are considering a change to your current accounting systems, contact us today and receive a free license for Sage Cloud Business and an unlimited free hotline for support! And, more importantly, sign up for a training session to equip you or your staff with the knowledge they need to make full use of this new technology.

Sage One is a cloud based accounting software, Get your free license, we will provide training and support

To learn more about our accountancy service and training for charities, social enterprises and small businesses in Glasgow, call 0141 334 1318 or email us at

[1] Nesta. Sage. The State of Small Business Report. (2017). Available at:
[2] Lloyds Banking Group. UK Business Digital Index. (2017). Available at:
[3] Nesta. Sage. The State of Small Business Report
[4] Koss V., Azad S. PwC. This Is for Everyone: The Case for Universal Digitisation. (2012). Available at:
[5] Lloyds Banking Group. Lloyds Bank Digital Business Index. (2015). Available at: