The new year marks the opportunity to refocus and set goals and intentions for the new year, and this is no different for SMEs. Without assessing what has been done well, and what is needed to be done to accomplish business objectives, minor task inefficiencies can add up over the year.
In particular, business leaders should consider manual or time-consuming processes that could benefit from digital solutions. The government and the media have widely publicised the benefits of such technologies, but why do some business owners remain reluctant to make the digital switch?
Applying behavioural science, Xero commissioned the One Step study seeking to understand the key behavioural barriers that might hinder SMEs when choosing technology, and providing recommendations on how to overcome them. The study found that Singapore has the highest proportion of tech adopters out of the six mature markets surveyed.
Thanks to government initiatives like SMEs Go Digital, launched by the Infocomm Media Development Authority (IMDA) in April 2017, small businesses have benefited from grants and subsidies to adopt an ever-growing range of technology solutions over the last few years.
The One Step study also revealed that nine out of ten respondents in Singapore wouldn't hesitate to make the switch if new tech solutions offered their business a better way of doing things. But while respondents might be more receptive towards tech solutions than their counterparts in New Zealand, Australia, the United States, the United Kingdom and Canada, Singaporean small business leaders also shared the two most common behavioural barriers found amongst all the markets - relative judgement and choice paralysis.
Relative judgement refers to the perception of having to make decisions with limited knowledge of the field, and an inability to assess and rank options qualitatively. According to the survey respondents, this was often the case for digital technology.
Choice paralysis is the inability to decide when presented with too many options. A large selection of products, each with a wide range of benefits and drawbacks, can make it more challenging to evaluate choices, prolonging the decision-making process and creating anxiety and frustration.
Having more options is a great thing. Competition means that products have to continuously improve whilst remaining affordable. However, the proliferation of tech solutions available to business owners can confuse the decision-making process. As a result, some choose the most readily available option rather than the solution best suited to their business.
Founder of Panamericana restaurant, Julian Serna, recounts struggling with multiple accounting software platforms for his fast-growing food and beverage (F&B) business before coming to Xero. The resources spent implementing new solutions that ultimately don’t work with other systems or help businesses scale can significantly impact the growth trajectory of an SME. Add on an incredibly challenging business environment in the middle of a global pandemic, and the necessity to make smart choices quickly becomes even more evident.
There are tools that SME owners can employ to help them better assess their options. A decision matrix, for example, can aid with visualising pros and cons against specific criteria. Another option is a pre-mortem, which starts with the end result and works backwards, creating a list of potential points of failure for both current and alternative solutions. Lastly, there is the power of community. Speaking to fellow SME owners is a great way to share learnings and get recommendations.
Technology providers and policymakers can also help simplify the decision-making process by narrowing the number of choices on offer and benchmarking areas of comparison. Where there is more than one option, using like-to-like comparisons helps make the process less daunting. The more benefits that resonate with decision-makers personally, the greater their inclination will be to take that first step.
As such, it is critical for technology providers to find a balance between highlighting the value and importance of their solution alongside providing the guidance needed to help business owners overcome their relative judgement and choice paralysis.
While Singapore is on the path to recovery, economic uncertainty remains. Small business leaders should use the new year as an opportunity to assess their business with fresh eyes and find ways to simplify and streamline processes with technology. With a better understanding of the psychological barriers that stand in the way to digital adoption, small businesses can start the year set up for success.
Joseph Lyons is the managing director of Xero Australia and Asia