Small enterprises are usually the ones that could benefit from adopting a new tech the most. After all, it saves labor, reduces costs, and increases competitiveness, which just happens to be three major bottlenecks they’re facing.
Still, despite this, a lot of small businesses just can’t seem to keep up. What gives? Well, the answer to this question is more complex than you think and here are five potential answers.
Customers are just not there yet
Sometimes, you’re not sure that your customers are as interested or as engaged with the technology to make the adoption cost-effective. A perfect example of this is the adoption of cryptocurrencies as a payment method.
Today, Bitcoin is accepted as an online payment system by many online merchants. The cryptocurrency can also be used as collateral to take out loans, to play at crypto casinos, and locked to earn interest (source: https://www.techopedia.com/cryptocurrency/best).
And while there are a lot of customers who are investing in crypto, the vast majority of them are not using it as a digital alternative to cash. Sure, they’ll refresh the list of the latest crypto to invest in, but they won’t even consider making a payment this way. For this purpose, they would prefer to use fiat cash.
So, this creates an issue of how viable it is actually to introduce this as a payment option.
Then, there’s the likelihood that your customers are still on the legacy platform. It doesn’t matter that there’s a better system or software out there – you need to align yourself with the majority of your audience. Sure, you might want to start including support for newer systems in the offer, but if a big enough portion of your audience makes this switch, it won’t be cost-effective.
Either way, a small business has a limited budget, which is why it usually can’t afford to make a preemptive switch. Sure, staying ahead of the curve is important, but it just isn’t feasible sometimes.
Sustainability adds extra costs
Even in this day and age where technology is making sustainability more available, a lot of businesses struggle to make their business green enough. In many instances, this extra cost is just enough to tip the scale toward unaffordability.
Sure, sustainability makes you more marketable, and in the age where the majority of your audience actually cares about sustainability, this is a massive PR win. Still, a lot of people have a hard time quantifying what they’re getting from this. Sure, a customer may decide to buy from you because they’ve noticed that your moral and ethical values align, but what is the exact ROI of this? A lot of people can’t justify spending more before they can get these kinds of numbers as affirmation.
Another thing you must keep in mind is the fact that investing in sustainable methods, while it saves money down the line, requires an extra initial investment. In other words, a production machine that uses less power or resources for work will have a higher up-front cost.
The biggest problem with this is the fact that it’s a race against time. Every year, there are new regulations, with only a few of them ever being repealed or dialed back. Soon, everyone will have to go greener. It’s only a matter of time, and postponing might inevitably end up costing more in the long run.
Limited budget
Adopting new technology can be a costly affair. First of all, migration to a new system is expensive. You need to switch to a new tool, suffer downtime, or experience a temporary drop in productivity at the moment when you can’t really afford it.
You may have to get new hardware (capable of running these applications or, at least, capable of running them effectively).
You also need to suffer the costs of training and onboarding your staff to this new model. Depending on the platform, this can be done in a few days, but just the ability to use a tool doesn’t mean that they’re instantly proficient at it.
The way this is countered is usually through various plans and business models. The thing is that a smaller plan usually costs less. This means that you can scale it up in the future (the next point we’ll discuss), but for the time being, you can limit the functionality of the platform and actually pay less.
The second solution to this problem comes in the form of a SaaS business model. You see, instead of paying the full price for a license or a service, what you’re doing is paying a subscription with the right to use it for the time being. This has made a lot of new tools, platforms, and technologies more available and even extended the support that you receive.
Lack of scalability
While some solutions may be able to solve their current problem, they don’t scale that well.
Having to switch to a whole new system when your workload increases or when your business outgrows its current bounds can be expensive and cause a lot of downtime.
Now, for small businesses, scaling both up and down is a huge issue. The reason why so many small businesses (and even larger enterprises) are using freelancers is not just because they’re quicker to hire and onboard. If things go south, they don’t have to undergo the trouble of letting them go, paying for compensation, etc. Their work arrangements/contracts are more flexible.
Platforms that are paid per user can be quite scalable, even if they’re not the most cost-effective. Imagine a small enterprise that needs just 11 users, but the only two plans available are the ones supporting 0-10 users and the next one supports 10-1000 users. Is this one extra person worth switching to a more expensive plan? Usually not.
Sure, there’s a myth about small businesses taking it one day at a time. While we understand where this is coming from (there’s some truth to this mindset), they usually can’t afford to make short-term decisions that they’ll outgrow in months.
Lack of expertise
Every mistake is expensive. The same goes for every risk. The idea of using a trial version of the software and then abandoning it because it isn’t to your liking (or isn’t living up to your expectations) is a standard business practice. However, what if you need to commit more in order to use a platform?
The problem is that every new platform requires training (to be used efficiently), and sometimes, tutorials and free online learning materials are not enough. Ideally, you would need someone with this specific experience, and these people are really not that easy to come by.
Being an early adopter has its advantages, but it also means committing to using a tool that’s still in its crude form. You can rest assured that if the tool is a success (and you can often tell, even early on), you’ll gain a competitive advantage by being the first one to join. If anything, you’ll have these experienced “experts” before anyone else. The problem is that there’s also an option of waiting for the platform to become more polished. The thing is that the latter often sounds more appealing.
It all comes down to resource efficiency
The main reason why small businesses aren’t as quick to adopt new technologies lies in the fact that they can’t afford it. They can’t afford the extra manpower to dedicate to this task, they can’t afford to migrate, and they definitely can’t afford to take any risks. Migration is expensive, and a small business already has too many expenses as it is. Still, it’s beyond doubt that this is sometimes more than worth it.
