When it comes to adopting new technology, where does your business fall on the spectrum—and how does that compare to what your peers are doing?
A recent Bredin Insight report, SMB Tech Purchase Plans: What, Why and When, polled small and mid-sized businesses (SMBs) to find out how they use technology to grow.
Here’s a closer look at the results and what they might mean for your business.
Who’s Buying Technology?
The survey polled 600 U.S. SMBs businesses, categorized as follows:
- Very Small Businesses (VSBs, up to 19 employees) 58%
- Small Businesses (SBs, 20-99 employees) 25%
- Midsized Businesses (MBs, 100-500 employees) 17%
Businesses were split fairly evenly among professional services businesses, manufacturing and retail/wholesaling (about 30% each) with the remainder in personal services and education/training fields.
As the chart below illustrates, the majority of respondents have been in business quite a while.
Here’s how the businesses’ revenues break down:
- Under $500K – 50%
- $500K-$999K – 15%
- $1M-$4M – 21%
- $5M+ – 15%
The majority are projecting revenue growth for 2018. Some 37% project growth of between 10% and 100% (the study dubs these “fast growth” companies), while 9% project over 100% growth (dubbed “hypergrowth” companies).
“Slow growth” businesses (25% of respondents) project growth of under 10%. Fewer than one-fourth (23%) project no revenue growth at all.
Younger business owners, owners of bigger companies, and owners of younger businesses are the most likely to be optimistic about their 2018 revenue growth.
Why do SMBs buy technology?
There are several reasons why those surveyed choose to make new technology purchases.
- One-third (33%) of survey respondents are early adopters who see technology as essential to their success.
- One-fourth are late adopters who see technology as an expense to minimize; they adopt new technology only when it’s absolutely necessary.
- Most respondents (42%) fall somewhere in between: They know technology is important, but they aren’t the first in line to buy the latest shiny object. Instead, they wait until new technology has been proven before investing in it.
Is there a connection between business growth and early adoption of technology? That depends.
Companies categorized as fast- or hyper-growth are much more likely than businesses projecting slow or no growth to view technology as “essential” and to be aggressive tech adopters. In contrast, slow- or no-growth businesses are more likely to wait until a purchase is “absolutely necessary.”
It’s possible that rapid business growth requires greater tech adoption—but it could also be that technology drives rapid growth.
Younger business owners are more likely to be early adopters than older ones, as are owners of bigger businesses.
Here are the top reasons all SMBs purchase technology:
The majority of reasons are reactive—just 39% are proactively embracing technology to take advantage of an opportunity. Generation X business owners (age 35 – 49) are the most likely to do this. More than half (59%) of Gen X entrepreneurs purchase technology to take advantage of an opportunity, compared to 42% of millennials and 31% of baby boomers.
What hardware are small business owners buying?
Here are the top 10 types of hardware small businesses either have or will purchase in 2018-2019.
Businesses under 10 years old are more likely than average to have aggressive plans to adopt all 10 of these technologies by the end of 2018.
What software are small business owners buying?
The top types of software small businesses either have or will purchase in 2018-2019 are:
- Security software
- Accounting/financial management software
- Storage/file backup software
- Payment software
More than half of small business owners either have these tools in place or will be acquiring them this year.
However, there are several areas where small business owners falling short in software adoption, as you can see from the chart below:
- Only 11% have CRM/sales force automation tools in place; an additional 15% plan to add them by the end of 2019.
- Just 13% have marketing automation software in place. Nine percent will acquire it this year and 10% in 2019.
- Surprisingly, fewer than one-third of companies have file sharing software in place, and only 14% will add it by the end of 2019.
- Another tool not widely adopted is social media management software: 24% currently use it and 17% more plan to acquire it by the end of 2019.
- Just 19% have website analytics software in place, and only 15% will acquire it by the end of 2019.
It’s a reasonable bet that the software tools above could have some significant and immediate benefits for your business. Sales, marketing and social media management are huge concerns for most entrepreneurs, and automating as much as you can in these areas can save you time, make your marketing more effective and save you money.
Also of note: No-growth companies are the most likely to have “no plans” to purchase new software by the end of 2019. That seems to tell us something about the connection between technology adoption and business growth.
When technology has so much potential to help your business grow, scrimping in this area is usually not the best long-term choice. If you’re reluctant to adopt new technology because it’s not in the budget, it may be time to explore creative financing solutions to meet the challenges ahead.
Ready for more?
Apply for funding and find out if you qualify today