Why do small businesses distrust technology?

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There are almost daily announcements from the technology sector announcing new products to help customers ‘innovate’, work more productively, or manage resources more effectively. These are followed by digital ad campaigns and other communications to reinforce that message – technology will take your business to the next level.

Despite the commercial motivations of these messages, there is truth behind the rhetoric. According to research conducted by Xero and Cebr, tech adoption among the UK’s smallest businesses could add £77 billion to the UK economy and generate 885,000 jobs.

So why aren’t small businesses snapping up new tech as fast as they can get their hands on it? The same study also found that 40% of these firms fail to see the relevance of technology to their organization. In fact, many owners are stuck in the ‘if it ain’t broke, don’t fix it’ mentality, or can’t face choosing between the available options.

Understanding why this stigma exists, and how to overcome it, is crucial for small business owners looking to grow their business and harness technology to enable long-term success.

Sonya Dineva

Senior Lecturer in Business Psychology at the University of East London.

The fear of change

Investing in any business takes time, effort and money. While a successful strategy can result in consistent growth, many owners are afraid of wasting their scarce resources on one that fails.

For example, choosing the wrong sales platform could lead to increased costs, or a new system that requires more time from staff to manage. These concerns underpin why many small business owners grapple with the ‘hassle’ of adopting new technology as much as any other barrier. At the same time, change can make it feel like you are no longer in control of your business as unfamiliar processes are brought in.

These feelings can be magnified for small businesses. In contrast, large firms have established structures and the luxury of group decision-making with multiple stakeholders feeding in opinions and perspectives. But for the smallest businesses, the burden of decision-making often falls to one person. At this stage, people can quickly adopt an ‘all or nothing’ mentality, thinking they need to fully commit to a system they might not be convinced by, but believe they need to survive. Sometimes, small business owners fall foul of cognitive bias where they only see what they want to see or keep making the same (under)investment decisions just because they have already committed to a specific course of action.

Overcoming the barriers

Fortunately, there are several tricks available to ensure that psychology isn’t holding your small business back from productive digital change. Firstly, it is important to understand the ramifications of under-investment. A useful tool to overcome this is imagining a scenario where you haven’t invested in technology. This makes it easier to visualize the benefits, the opportunity cost of inertia and why change can be a good thing – particularly if competitors are on the digital offensive.

Next, start small. Just 27% of businesses believe they get their tech and software choices right. That can help navigate the concern around making significant upfront investment. By prioritizing the options predicted to have the most impact, business owners can start to break down what can seem like an insurmountable mountain of digitalization. It can also bring other members of the business on board, once they see the benefits new technology can bring.

It's also vital to learn from others. Speaking to other small businesses that have been through similar processes, or talking to advisers like accountants who can draw on knowledge from working with lots of similar sized organizations, can help bring in knowledge of what worked and what didn’t. Helping you make a more informed decision.

But it is not all on small business owners to change their mindset. Tech suppliers need to examine how they communicate technology offerings to them. If owners see that the majority of successful businesses at their level have adopted a type of technology, they might feel they are missing out, and invest as a result. Unfortunately, the majority of messaging currently targets larger SMEs, and fails to understand the unique needs and priorities of truly small businesses, which means many owners simply dismiss it as irrelevant.

Don’t forget about the big picture

It can be easy for business owners to focus on day-to-day operations. In the current climate, they would be forgiven for putting survival first and losing sight of the long-term. However, a narrow focus prevents entrepreneurs from thinking about how to run their business better, and despite the long days, this will prevent it from growing.

This makes working with trusted advisors even more important, to help them overcome this mindset and provide perspective. For example, working with accountants to develop financial plans can help owners invest in technology at the right time.

Small business owners face a myriad of challenges. However, by re-framing their attitude to change – particularly digital change – they can start to trust the technology that can help them manage these obstacles. Not only will it help them as individuals, but it will give the engine room of the UK economy a significant boost as well.

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Sonya Dineva is Senior Lecturer in Business Psychology at the University of East London.