38% of UK small businesses lack basic digital skills

Sole traders are the least likely to have digital skills, with 78% still investing nothing to develop these skills

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Up to 38% of the UK’s small businesses lack even the most basic of digital skills, according to findings from the third annual Lloyds Bank UK Business Digital Index.

The survey of 2,000 small businesses found that business owners with high digital skills were twice as likely to report an increase in turnover as those with the least, while 69% of respondents admitted a need to develop their digital skills.

Developed in partnership with Doteveryone, the study defined five key digital skills that are needed for business owners to get the most out of being online: managing information, communicating, transacting, creating and problem solving – 62% of small businesses were found to have all five skills.

Sole traders are the least likely to possess these key skills (50%), while the number of sole traders investing nothing in the development of these skills has dropped by 10% to 78% in the last year. A report from 123 Reg last month found that hundreds of thousands of micro-businesses still don’t have a website due to a lack of skills.

15% of business owners surveyed cited a lack of digital skills as the main barrier to doing more business online, followed by issues surrounding cyber security (14%) – both of these figures have increased around two-fold since last year.

The study also revealed that only 21% of small businesses take advantage of the digital world when trading overseas, with 24% of those who reported increased turnover in the last 12 months currently exporting. Manufacturing companies (39%) and retail firms (26%) were the most likely to trade overseas.

With social media usage amongst respondents up 45% and many preferring online search, friends, relatives or colleagues for digital help, the report suggested that the reason 66% of businesses still don’t invest their budget in digital skills is that they may be looking for low cost, or free, resources instead.

In June, a select committee revealed that the UK is facing a digital skills crisis that could damage the country’s productivity and competitiveness and cost the economy around £63bn a year.

Nick Williams, consumer digital director at Lloyds Banking Group, said: “It’s very encouraging that the Business Digital Index shows an even stronger link between the digital maturity and organisational success of businesses and […] However, there are still too many without the basic digital skills which allow them to make the most of the internet.

“[…] We need to do more to reassure and support them to develop their cyber security skills.”

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