That productivity gap was highlighted in a Goldman Sachs’ note published last November. It found a US-based employee generated 39% more GDP compared to their UK-based cousins. This gap is where technology, which helps small businesses become more productive, can have the greatest economic benefit.
The entire nation benefits
In the UK, and right around the world, small businesses are a massive economic driver. Accounting for just over 99% of all companies in the UK, they generate 47% of the nation’s revenue and employ 60% of the workforce. They’re the key to unlocking economic growth.
However, many small businesses deliberately remain small to avoid onerous government taxation and compliance thresholds, a recent Xero survey of 1,300 UK small businesses shows.
Given the economic contribution these entities make to UK GDP, stunted growth has a material impact on the national economy.
The UK government accepts the need to reduce the compliance burden on small and medium businesses, which they are attempting to do through their tax simplification and digital transformation policies. This will hopefully encourage more small businesses to expand, and by adopting technology, they’ll be better equipped for this journey.
Technology unlocks productivity
On both sides of the Atlantic, the technology boom is shaking up entire industries, flipping the way we work by streamlining and automating tasks. It’s also connecting businesses with completely new customer bases.
Global SaaS company Xero has its sights set on flipping the straight-edged accounting sector and in the process, help small businesses thrive by giving them a platform which incorporates real-time data and provides the opportunity to collaborate with their advisors by giving entrepreneurs the tools they need to operate efficiently in the modern world.
Co-founder of Financial Forecasting growth company, CrunchBoards, Amy Harris told Xero recently that by using a single ledger and real-time data, Xero has streamlined the time it takes to service customers. It also gave her company its purpose.
“Traditionally the relationship between accountants and small business owners could only be reactive. The conversation was focused on the past. Xero and CrunchBoards changes that, it’s cloud data core (Xero) is unlocked and visible in beautiful real-time dashboards. CrunchBoards allows a business, and its advisor to look ahead and be proactive — what’s your financial position today, not at the end of the month,” Harris said.
“Imagine the impact on our economy if accountants and business owners were working together to look to the future. Banks, governments, accountants, business owners discussing today and what’s ahead. The past is a guide and important but if you’re best selling product line isn’t priced correctly, you’ve wasted time not addressing the issue.”
It demonstrates how enterprise-grade technology, which was once only viable for big businesses, can now be used every single day in the smallest of companies. Xero and CrunchBoards combined is a great example of how big data can be used in small businesses.
Cloud technology is creating new industries and growth opportunities
By deploying cloud technology, a world of opportunity is opening up for small businesses. It’s also helped establish entirely new entities which are helping existing small businesses work smarter.
“Our business wasn’t possible without cloud accounting software and Xero,” Harris said.
“By taking the data from Xero, we unlock it, let you slice and dice it, look at industry KPIs, so you can really understand what’s going on in your business.”
The spread of affordable technology solutions is giving business owners the opportunity to think about their next phase of growth.
It’s also levelling the playing field. By giving small businesses access to sophisticated technology, that was once only available to enterprise, the little guys are starting to compete with the big end of town. There are a lot of advantages that come with being small, you can pivot quickly, provide bespoke solutions and act in an agile fashion.
Having access to live data on the Xero Dashboard, small business owners have a real-time view on the state of their company, from anywhere, they can get a better understanding of where they’re at.
By opening up integrations with the likes of Apple, Google and Microsoft, linking up bank feeds and connecting more than 480 add-on partners to the cloud accounting platform, Xero has been able to streamline the lives of small business owners right around the world.