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GOING DIGITAL Unlocking the potential of North West SMEs

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Welcome The UK’s Small and Medium sized Enterprises (SMEs) have long been recognised as highly valuable engines of growth for the economy. The most recent Federation of Small Businesses’ statistics show that at the start of 2015 SMEs accounted for 99.9% of all private sector businesses in the UK, employed 14.4 million people and had a combined turnover of £1.75 trillion. The success of SMEs and their ability to grow is vital for the UK’s economic performance.

The North West is a hotspot for developing SMEs. The BBC’s move to MediaCityUK encouraged digital start-ups to make their home in Salford. Meanwhile Greater Manchester, Merseyside and Lancashire are seeing significant year-on-year SME growth, particularly in the business administration, science industry, communications and IT sectors. However, the future growth of SMEs relies on their ability to engage with the digital world, and ultimately to operate as digital businesses. Here at Salford Business School we define digital business as “the use of human resources and information communication technology to drive communication and interactions, and effectively deliver business services and products”. In other words, “a digital business sustainably integrates human resources and contemporary digital technologies to create value for the business and its customers”.

Going Digital: Unlocking the potential of North West SMEs

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So what does a successful digital business look like? It looks fast! Uber and Google are often revered for their use of digital data streams and their ability to analyse and distribute data immediately. Smaller companies are also embracing this technology. Recent success stories in Europe include Inventiva, a clinical stage drug-discovery company delivering breakthrough therapies in the areas of oncology, fibrosis and rare diseases, based in Dijon, France. By investing in software that allows all its devices to share data, rather than relying on staff to manually collect data, the company has gained an unprecedented advantage over its competitors.

Here at Salford Business School we are delighted to work with local SMEs – both digitally native businesses and companies in more traditional sectors who want to harness the enormous power of digital. As we work closely with the business community in the North West, we want to make sure our research and expertise directly benefits local businesses. We’ve created this guide to get North West SMEs thinking about the opportunities and challenges of digital business. From addressing the possible benefits of the Northern Powerhouse to looking at issues of cyber security, we hope this guide will help people across the North West community.

Dr Gordon Fletcher Interim Dean of School

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Contents _6

Mind the skills gap: How to grow your SME digitally

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How digital marketing can take your company global

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How to build your business on social media

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Big data: Not just for big business

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Going digital: Mitigating risks

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How will the Northern Powerhouse benefit my digital SME?

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The generation game: Family-run firms in the digital age

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Could the Business Growth Hub help your business?

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If you’re not digital you’re not sustainable

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Growing Pains: Is the digital sector growing too fast?

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Get in touch

Going Digital: Unlocking the potential of North West SMEs

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Mind the skills gap: How to grow your SME digitally

Mind the skills

There’s a clear business case for SMEs going digital, but how can SMEs overcome the barriers and bridge the skills gap? Here are my top five tips on how SME owners can grow their business digitally:

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How to grow your SME digitally

Article: Dr Marie Griffiths Director of the Centre for Digital Business

With the UK’s SMEs recognised as engines of growth in the economy, it’s worrying to hear that so many of them are struggling to enter the digital age. Recent research from Go ON UK, the UK’s digital skills charity, shows that almost a quarter of small businesses (23%) are lacking basic digital skills. Some SMEs are also lacking important digital infrastructure. Research by Santander shows one sixth have no website at all, while just 34% can accept payments online. Why should SMEs be worried? Lack of digital capability could be harming their bottom line. SMEs that have a non-existent or limited digital presence are missing out on their share of the £193bn generated by the UK’s annual web sales. SMEs that digitise their back office function could also make cost savings of 20%.

As we’re living in an increasingly customer-driven world, SMEs that fail to become digital will struggle to engage effectively with customers. Today’s customers expect instant responses and to find information on the latest products and services as painlessly as possible. Customers are also less loyal than ever, so if an SME can’t meet these needs, they’ll go to a company that can.

Develop a digital strategy

The digital skills gap in SMEs is partly driven by a lack of understanding of what digital really means. Many SMEs want to hire someone who is good at digital marketing, but a fully operational digital business needs employees with a broader skill set and the necessary infrastructure to support them. To ensure their company is truly digital, SME owners need to start by considering the core activities of their business and then produce a digital work plan that is integrated with these day-to-day practices. The digital strategy needs to oversee work in every department – from sales and marketing, to HR and supply chain – to ensure that all transactions with internal and external stakeholders (customers, suppliers, employees) can be conducted digitally.

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Encourage a digital culture

Digital skills and infrastructure are sometimes perceived as a bolt-on in organisations, but bringing in tech-savvy new employees won’t resolve issues of arcane business practices if there’s no buy-in from current employees, particularly the senior management team. There needs to be a culture of digital thinking throughout the SME, to ensure that new technologies and ways of thinking become embedded in the company’s dayto-day activities. This is achieved via a three-pronged approach: encouraging new behaviours among employees, changing business processes and bringing in new technology.

Source: www.digitalbusiness.com

Going Digital: Unlocking the potential of North West SMEs

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Use marketing automation software

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Pay attention to cyber security

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Horizon scanning

While digital business isn’t all about marketing, the growth in social and digital media means that customers are a) coming to SMEs through a range of different channels, and b) providing valuable data which can be used to enhance the customer experience. Marketing automation software allows SMEs to pinpoint key moments in the customer journey and capture and analyse this data. SMEs can nurture prospects and current customers with personalised content that enhances customer relationships and generates additional revenue streams.

There are downsides to going digital, including the threat of cyber-attacks. According to a UK Government report, 60% of small businesses admitted to suffering a security breach in 2014. Keeping up-to-date with new cyber security threats in this constantly changing landscape may seem overwhelming to an SME, but bringing in external support where necessary and ensuring staff are well-trained to spot potential threats is vital. Having a visible digital security policy on the website clearly communicates externally that the SME is taking active steps to protect its business and customers.

Time and resource stretched, SME owners and employees can be so busy firefighting and doing ‘today’s work’ that they are left with little time to reflect and look outside. But to innovate and stay ahead of the game, SMEs need to constantly horizon scan so that they can spot the next big thing and think about how these developments will impact their business. 7


How digital marketing can take your company global

The growth of digital communication channels has thrown SMEs into a challenging new world. SMEs now have better access to international markets, but this has come with increased competition from global competitors. SMEs that flourish in the new international marketplace are invariably those driven by competition and willingness to adapt and innovate. There are a number of ways for SMEs to harness digital and social media marketing to help them grow internationally: Adjust your company’s mindset

Use digital to tell your story

Digital marketing is all about understanding and engaging with the potential customer rather than pushing your product out to the widest audience possible. It’s about making sure that you’re part of relevant conversations that people are having on digital channels such as social media, search engines and email; making sure your voice is clearly heard by those who may be interested in your product or service. Embracing digital and social media marketing means accepting that these ‘arts’ are constantly evolving.

The efficiency of multinational giants like eBay and Amazon is an immediate threat to SMEs which rely on a local customer base. The “if you can’t beat them – join them” strategy can work well for SMEs – both Amazon and eBay allow smaller businesses to share their products on their platforms. An alternative strategy to counter this domination is to identify a bespoke sense of value for your products and/or services. One way SMEs can achieve this is by highlighting the unique story behind their company’s foundation.

Set up listening and monitoring systems, for example using free tools such as Google Alerts, to help you follow relevant online activity from appropriate channels. You can then react quickly to news and trends and contribute to the digital conversation by sharing relevant information via your social channels.

This can work particularly well for SMEs who can capitalise on their local heritage. An example of this is family business, J. Atkinson & Co., a coffee roaster and tea merchant that participated in our research at Salford Business School. The company used its website to record its cultural heritage in Lancaster, including its base next to Lancaster Castle, as well as the company’s development from 1837 through to their current expansion. Via its website, J Atkinson & Co. evidenced the unique identity of its products to current and potential customers. The company also used Twitter and blogs to document its history, allowing customers to experience the same unusual narrative online as they would in the company’s Lancaster home. This contrasted to the mass homogenisation of the market as a whole, giving the company a unique voice and helping it stand out and offer an authentic story in a busy marketplace.

Google Alerts also lets you track what groups are saying about your company and competitors, providing useful data to feed back into your marketing strategy.

Article: Dr Aleksej Heinze Co-Director of the Centre for Digital Business

Universal Analytics, the latest version of Google Analytics, lets website owners understand how individual users are interacting with their website. This data is valuable for optimising your website as you can track and understand how users are engaging with your content across multiple devices.

Turn to read on

Going Digital: unlocking the potential of North West SMEs

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How to build your business on social media

How digital marketing can take your company global (continued).

Define your social media policy Our research into European SMEs and their use of social media shows that Scandinavian companies are most aware of how to use social media strategically to meet the needs of their businesses. This is in contrast to those companies using social channels to broadly ‘raise awareness’ without any clear aims for their social media output. Although over half of the SMEs responding to our survey used social media for business purposes, only 27.11% had a social media policy. For the companies we surveyed in Sweden, Finland, Denmark and the Netherlands, social media is not just about publicity – it is also a tool for creating business partnerships and generating marketing intelligence. Northern and Central European countries, including the UK, need to understand how valuable social media can be in these areas. Companies should start by identifying which audiences they want to engage with on social media and work out which platforms are most appropriate. It may be best to have separate social platforms for different divisions of a company, for instance a corporate team within one company may wish to differentiate themselves from more product/consumer facing communications. It’s important to understand which platforms your target customers are using and how you can engage meaningfully on these platforms with them. For example, companies in the UK aiming content at younger markets may want to invest more time in platforms such as Instagram and Pinterest.

Going Digital: Unlocking the potential of North West SMEs

Communicate with the European market

Look beyond the traditional office

Whilst the enlargement of the EU has offered significant trade potential for firms across Europe, only 8% of EU SMEs export, compared with 19% of larger firms.

Being more mobile allows you to be more international

Opportunities are missed when social media is not fully utilised for commercial networking purposes. The frequent use of the English language on social media means commercial networking is easier for UK SMEs than for their non-English speaking counterparts. As millennial managers begin to become more prolific, social media etiquette, or “netiquette”, does not differ much across Europe, breaking down boundaries and streamlining communication. This has secured the success of sites such as TripAdvisor, and can work to the advantage of UK and EU SMEs too. How can connecting to the European market help SMEs? People do business with people, but how do businesses find more people who might be interested in working with them? The answer is by joining professional social networks. Connecting with the European market helps UK businesses grow their networks. Depending on an organisation’s strategic priorities, joining platforms including LinkedIn (UK), Xing (Germany) and Viadeo (France) can increase the chances of finding individuals in relevant countries.

Digital businesses have the advantage of being more mobile, and thus more flexible. 90 Digital, an integrated SEO, digital PR and web development company with no physical premises, has fully harnessed the power of digital and saved itself a fortune in the process. This suits their staff, who have found that freedom from a traditional office base allows them to be more creative, and respond more immediately to global opportunities. Aferdita Pacrami, CEO of 90 Digital, comments: “I’ve noticed huge differences in 90 Digital and companies I’ve worked at in the past and I think that’s largely due to the way we work. People are much more effective with the time they have and work much more efficiently because that’s the time that they choose to work. Due to the flat organisational style of our agency everyone’s voice is heard and that means we get more great insight that we might not otherwise have had because people feel freer to share their ideas.” The result has been expansion into Asian markets and added authenticity to the company’s brand. They are forward thinking, and prepared for the future.

Digital Businesses have the advantage of being more mobile, and thus more flexible.

It may not cost anything to use Facebook and Twitter but engaging with social media channels comes with a hidden cost. They should be given equal weight to traditional

Strategise

your customers’ Planning is ever ything. Understand are they finding how – s need ’ mers and future custo they find you in t your business online and how migh esses to busin s allow ytics Anal gle the future? Goo mers are create a clear picture of how custo . interacting with online platforms

Evaluate your competitors

g in the search How well are your competitors doin What social ? Bing and o Yaho results for Google, many Twit ter how and using they are orks netw have? When followers and Facebook fans do they lot of engagement a there is sites e thes on post they ‘liked’, ‘shared’ and from their user s? Are their post s and isn’t working is t wha tify Iden on? ted men com learn from their and r secto your for competitors in res. failu and s esse succ

Consider your target audiencesbeing used

orms are Evaluate which social media platf s. Plug -ins and services ence audi et targ your by larly regu easy and free way like www.addthis.com provide an to your website. s icon ing shar ia med l socia add to

net works Commit to a small number of

Devote time to a small Don’t spread your self too thinly. are relevant to your number of social networks which It’s better to grow well. e thes do target audience and couple of channels, a on ity mun com ged enga , a large than be on ever y platform.

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marketing tools and used as part of your wider marketing and business strategies to be most effective. Here are eight tips to help you refine your approach.

Produce great co

nt

ent W hat is likely to interest your audie nces? A combina of photos, animati tion on and video can of ten lead to mo engagement than re plain tex t alone. Ask your followe questions to enco rs urage them to int eract with you. Yo content should be ur engaging, informa tive, interesting and relevant to yo ur company.

Pay at tention to de

tail Poor writing, low quality images an d bad design will do more harm th an good for your brand. Assume th your audience wi at ll spot your mista kes and judge yo negatively for yo u ur lack of care.

A sk for feedback

Social is a quick and easy way to gain customer feedback. Positive comments should be acknowledge and it’s important d, to ensure that ne gative comments can be quickly ad dressed by a memb er of staff with th authority to rec tif e y the situation. So cial media platfo need to be monit rms ored at all times so that customer complaint s can be dealt with swiftly and efficiently.

Make sure you get a good retu rn on your investm ent

Your social media strategy should fo rm part of your overall marketing plan. Make sure you’re analysing engagement on your social media platforms in the same way that yo u track the outco me of other camp aigns. Ar ticle : Alex Fe nton Lecturer in Digital Business 11


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Not just for big business According to research by technology giant IBM, every day the world creates 2.5 quintillion (that’s a number with 18 zeros) bytes of data. 90% of the data in the world today has been created in the last two years. This growth in online information can be attributed to the evolution of social media, increasingly sophisticated analytics platforms and the exponential development of mobile and digital technologies.

Going Digital: Unlocking the potential of North West SMEs

With such huge quantities of data, how do you begin crunching the numbers? Whether it’s complex algorithms or industrial scale data collection and analysis, turning data into tangible, meaningful information can seem daunting to corporate giants, let alone to small business owners. This is time and resource heavy, demanding advanced technical capabilities often out of reach for small companies.

Big data: Not just for big business

When it comes to big data, attitude is one of the key dangers for SMEs. Many believe it can be ignored if you are a small business. It can’t. Like it or not, big data is here and it is something SMEs need to tackle. Not because it is the latest digital buzzword, but because if SMEs don’t begin to take advantage of what big data can offer, they will fall behind both bigger businesses and rival SMEs which are already embracing this change. So what exactly is big data? And how can it help your business? As the old adage goes, “knowledge is power”, and that is exactly what big data is, knowledge about your customers and clients. It is ‘big’ because it is made up of different variables and analytics, combined to create an in-depth digital portrait of your organisation’s consumers. Once collected and analysed, big data can tell you about consumer behaviours, buying and browsing habits and social media preferences. Like all businesses, SMEs need to better understand these different behaviours to understand what customers want. Sometimes that means predicting behaviours before consumers even adopt them. In doing this, companies can become more efficient and proactive in targeting customers, which helps them in numerous ways, for example, strengthening customer relationships or developing a new product.

As the old adage goes, “knowledge is power”, and that is exactly what big data is.

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How to deal with big data Prepare for big data Many SMEs are yet to acknowledge how big data can impact their business. So, be aware of it. How are other firms in your sector using it? What are the challenges? Once these have been identified you can take steps to overcome them. Include big data in your strategic planning. Not all businesses will be ready for a comprehensive big data overhaul, but it should at least be acknowledged and concrete steps taken to start using it over a realistic timescale. Big data staff Preparation also translates into internal buy-in. This is a must. You need employees who understand the importance, nuances and benefits of consumer data collection and analysis. This doesn’t always relate to the technical, IT side of resourcing. It could be a marketing manager who understands and believes in the concept of big data. Business owners need to educate current staff on the opportunities of big data or employ team members who can lead in this area. Access vs analysis Think of the infrastructure and size of your business or company. Can you generate your own data collection and analysis through internal CRM systems, or do you need to access it through external sources? Either way, there are a growing number of affordable options for SMEs in this area. Processing power is cheaper and more widely available than ever before and more and more tools are being developed to help SMEs make big data work for them. You can acquire data and analytics services at affordable prices without much in-house expertise. Here are some of the inexpensive services available for SMEs:

Google Analytics This helps in the analysis of online customers so you can understand their level of engagement with your company. Kaggle This service helps you find a qualified data scientist who can work on your data analysis without you having to employ a full-time staff member. Tableau A simple and flexible data analytics tool that can be used by people with very little expertise in big data analytics. Axicom and Datalogix Companies which sell external data to SMEs at an affordable rate. Be smart with big data SMEs need to be strategic about the data they collect. If you have limited resources don’t try and capture every last detail about your customers or clients. Use your knowledge of the sector and clients you serve to set parameters. Data collection is just one step in the process. You will need to sort and analyse it, and present and apply your findings before big data will add value to your business. There is a lot of information out there, so it is important not to get lost. Data alone isn’t useful until you transform it into information and recommendations, which you can use to improve business efficiencies, consumer feedback and the customer experience.

Article: Professor Sunil Sahadev International Marketing and Services Management and Professor of Marketing

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Going digital: Mitigating risks

Going digital Mitigating risks

A traditional approach to digital

1. Not all help is good help, so be cautious of outsourcing – be careful if you choose to partner up with a digital agency. Yes, they can make your “shop window” very colourful, shiny and inviting, but you can also end up reliant on them. Consider adding a member to your in-house team with the relevant skills or developing a current employee.

The potential gains of digital marketing, customer relationship management or a new employee training platform, are well documented. But what about the potential pitfalls? First of all there’s the cost. In 2014, UK SMEs invested nearly £23 billion in technology equipment, a 53% increase on the previous year. In the next two years it is estimated SME tech expenditure could be as high as £53 billion. One of Europe’s biggest lenders, GE Capital, recently outlined investments in IT hardware assets as the “highest planned investments in the UK… driven predominately by SMEs’ need to enhance efficiency and productivity”. It’s not just about the latest hardware either. SMEs need to commit to ongoing investment. For example, having a strong presence online – website, Twitter feeds, Facebook, YouTube and Instagram – requires both initial outlay and continual input. Yes, social media channels are free to use, but to capitalise and fully exploit their benefits you need trained employees to create content, grow and engage with your user community, and monitor and analyse user activity, feeding this data back into an improved digital marketing strategy. Having an empty, out-of-date website or a dormant Twitter feed is the equivalent of having an empty shop window or an out-of-date product.

Information and cyber security are growing dangers for businesses of every size. Cyber security is defined as the protection of systems, networks and data online and in cyberspace. That protection can be against anything from viruses to major hacking attacks. According to the government’s Information Breaches Survey, 45% of small business suffered infection from viruses and malicious software in the past year alone. That was a 4% rise on the previous 12 months. Information security also includes offline elements of data protection such as keeping paper documents private, and the physical security of buildings. For SMEs, cyber security can be a minefield of complexity, combining rapidly changing and emerging digital technology with complex compliance regulations. Two of the major issues facing SMEs in relation to cyber security are the evolving ways we access and use the internet and the emergence of big data.

The way in which we access the web has rapidly changed since the advent of smart phones. We no longer need to be at our desks to access work emails, or at a computer to use online banking. Whilst this offers convenience it adds to security risks. Cloud computing, for example, offers SMEs flexibility, pay-foruse and reduced hardware investment, but there remain questions over its security. For example, is the level of encryption secure enough to protect sensitive customer, client or employee data? For businesses the decision to move to the cloud should depend on the sensitivity of the company’s data and the level of security being offered by the cloud provider.

With great digital power, comes great digital responsibility.

Data sets are growing ever more critical to organisations of all sizes and can be viewed as valuable commodities. Client consumer data, buying patterns, financial information and transaction details – the digital dust that is left behind online – needs to be stored and protected. It is the responsibility of each individual company to store and safeguard this information – an expense most SMEs could do without, but cannot ignore.

Article: Dr Marie Griffiths Director of the Centre for Digital Business Dr Maria Kutar Senior Lecturer in Information Systems Going Digital: Unlocking the potential of North West SMEs

Social media marketing, search engine optimisation and pay-per click advertising are all everyday practices for tech-savvy start-ups, but with SMEs from the so called ‘traditional sectors’, such as construction, we see a different story. Is a digital approach to marketing worth it for these companies? If so, how can they avoid the pitfalls?

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Here are three ways to protect your company from cyber-attacks. 1. Have anti-virus protection – it may seem obvious – but make sure your network and web protection are up-to-date and fully functional. It’s amazing how often these basics are overlooked. 2. Information security is more than just IT security – it is your responsibility to protect your client and customer information, as well as protecting your IT systems. Make sure the security protocol for your customer and client data protection is up to date and that staff are fully trained to use it.

2. From top to bottom – to avoid making digital mistakes you need to get buy-in from the top. This is because any digital strategy needs to encompass the whole company to be successful, so there has to be a cohesive, collaborative approach from implementation, led by senior managers. At the same time, leaders need to carry out a comprehensive consultation process with relevant staff members from across the business. This will help them understand the implications of the choices they make, and it will be easier to get buy-in from the staff who will use the new technology or follow new processes. 3. Digital is here to stay – SMEs need to view digital as an intrinsic part of business, not as a bolt-on. Digital isn’t going away and your business will get left behind if you don’t have a digital presence.

3. Stay ahead of the game – security technology changes rapidly and your company needs to keep up. Make sure your systems are up-to-date, but also regularly check for developments and horizon-scan, updating your company policies and providing your employees with relevant training. Depending on the level of technical understanding of your business, a good place to start is simply keeping on-top of mainstream news in this area, such as the BBC News and The Guardian technology sections. Tech industry magazines like The Register, Wired and ArsTechnica, or specialist publications, for example Infosecurity Magazine, give a more in-depth summary of sector developments. Setting up email updates for one or more of these sources is an excellent way to start. Businesses that need an introduction can use free courses such as the Open University’s, ‘An introduction to information security’.

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How will the Northern Powerhouse benefit my digital SME?

How will the

benefit my digital SME?

The term “Northern Powerhouse” has occupied the political agenda since Chancellor George Osborne announced his plans for the North in 2014. His aim was to create “a collection of Northern cities sufficiently close to each other that combined they can take on the world”.*

The Northern Powerhouse concept has the potential to strengthen the North West as a united region and this will benefit current SMEs as well as creating opportunities for start-ups. When politicians discuss the evolution of the North there is a tendency to focus on consumer-facing businesses. However, there are numerous opportunities for SMEs to develop in sectors such as supply chain management and logistics as well as B2B e-commerce.

Notable changes have been made. For example, Greater Manchester will be run by an elected mayor from 2017, and the city now has power over its health budget. The outworking of Osborne’s narrative has included renewed focus on training a skilled workforce alongside large infrastructure projects including major investment in transport.

Investment in the North West and subsequent business growth will mean both individual roles and ways of working will change. The integration of digital technology is a big part of this. This change has the potential to be radical. Consumer examples of this are Uber and Airbnb, where the set of activities that relate to cab hire and bed and breakfast accommodation are deconstructed and the functions separated. Supply chain management will be increasingly automated – to the extent that drones and driverless cars remove the need for drivers. Companies need to identify these digital advances as they will lead to changes in working practice. Rather than passively accepting a devaluation of existing roles they should realise the opportunities found in an increasingly digital business world.

The “Northern Powerhouse” description can seem disappointing, harking back to the North in the 19th century and great railway building projects, rather than highlighting our digital future. Despite this, the overall concept of the Northern Powerhouse is a welcome commitment to development in our region.

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It is important to recognise that the North West has been a powerhouse for media production for a long time and the development of Media City has further enhanced this situation. Many digital developers specialising in high quality production are SMEs and better infrastructure should mean technical issues such as poor bandwidth do not hold them back. The Northern Powerhouse isn’t about getting out on the road to another Northern city for a business meeting, but being able to work flexibly with the rest of Europe and the world.

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Going Digital: Unlocking the potential of North West SMEs

Source: BBC News Magazine Online

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Alex Connock, Managing Director of Shine North, comments: “For SMEs this is an opportunity and a challenge simultaneously. The opportunity is the rising tide of an economic hubbub that is creating more digital marketing work for agencies, more start-ups, more talented staff in the local economy, and more places to work. The challenge is to find a way of increasing the sales and exports of Manchester as a whole, first to London (where the majority of decision making clients still are) and then to the world.

“What’s great is that with the combination of the Northern Powerhouse, the global impact of two football teams, BBC Sport and BBC Children and fast moving local companies like AO, OnTheBeach or BooHoo, the brand impact of production in the region for a global market is more credible. That helps win business. We’ve seen that with our own business, Shine North in MediaCity, where we have been producing for largely global customers: both broadcasters and brands.” What we don’t want from the Northern Powerhouse is for the region to become a mass of call centres. Telecoms provider TalkTalk may have recently become embroiled in a security breach scandal, but the real problem for big telephone and internet providers is the inflexibility of their business models. Digital SMEs can provide a more personal and higher quality service and the North West is home to many such companies. It’s rewarding to see these digital specialisms developing outside of London. The Northern Powerhouse should boost this type of enterprise and allow SMEs to develop to the point that they can also reach out to international audiences, rather than more parochially focusing on supporting London’s businesses. It would be naive to argue that grouping northern cities together as the “Northern Powerhouse” means they have the potential to steal London’s crown as the country’s business capital. This is about focusing on innovation and realising international opportunities, rather than simply providing another source of labour to the South.

The Northern Powerhouse is a welcome commitment to development in our region

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Like the digital sector, family-run businesses are an integral part of the British economy...

The Generation

however, research suggests that family Family-run firms in the digital age

There are almost three million family businesses in the UK. They make up three-fifths of private sector firms and employ an estimated 9.4 million people, accounting for is 39% of all private sector employment in the UK. The North West alone is home to more than 300,000 family-run companies. That is 10% of all family firms in the country, with only London and the South-East region home to more. So, what does this mean?

Going Digital: Unlocking the potential of North West SMEs

businesses, especially SMEs, are slower to adapt to changes in the marketplace and more reluctant to do so. A recent report, published by the Government’s Department for Business Innovations and Skills, found that family-run businesses are more reluctant to introduce radical innovation, preferring to evolve naturally over time. Family companies, often built up over generations, are more likely to have long-term business objectives based on the desire for stability, making them more cautious and risk averse than other firms. As you would expect, this applies to the use of digital platforms and technology. A sixth of SMEs have no website at all, while just 34% can accept payments online. UK family-run businesses also tend to be hesitant to embrace foreign markets. For example, in comparison with German Mittelstand (SMEs in German-speaking countries like Germany, Austria and Switzerland), UK family-run SMEs are less likely to use innovation and export-led strategies to grow their businesses, settling for more traditional, domestic-based alternatives. They are missing the opportunity to learn about digital technologies and practices already used by non-UK competitors in overseas markets.

Societal issues and demographic changes are affecting the make-up of family businesses and the ways in which they use digital technology. People are living and working longer, which impacts family firm management teams and succession plans. More firms are run by “beanstalk” families, with three or more generations actively involved in running the company. This can have both positive and negative effects. In a multigenerational family workforce there is more potential for different ideas and expertise to be shared. Longevity brings experience and industry knowledge, whilst younger “digital natives” in the family can contribute in areas such as social media and digital marketing. However, the generation gap can also bring a clash of ideologies which can hinder innovation and quick decision making, especially around digital technologies where the pace of change is extremely fast.

When it comes to digital, what advice can we offer family-run companies? Read on to discover

Article: Udeni Salmon Researcher in Family Business, Entrepreneurship, Manufacturing and Innovation

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Our digital advice for family run companies Work with your local university From knowledge transfer partnerships (schemes that encourage collaboration between businesses and universities) to simple student placements, partnering with a local university can be a great way for family firms to introduce digital expertise in bite-size chunks. As well as staff and students who can provide academic and practical support, universities are often focal points for regional government-led initiatives and are linked to other relevant schemes and organisations. Universities are also easier to approach than some larger partner organisations which can have unwieldy application processes. Many of our students have had successful placements with family firms, often creating successful digital marketing strategies.

Could the Business Growth Hub help your business?

Capitalise on the strengths of your brand and existing networks

Joanne Hall, Business Customer Liaison Officer at Salford City Council, cites the EU-funded Business Growth Hub – partners with the University of Salford – as an excellent initiative helping North West businesses improve their overall growth through digital.

Many family businesses have spent generations building up their reputation and contacts list. Build a digital presence based around your company’s product and heritage; discuss what is unique about it and why it is important to your customer. A good example is the North West family firm Duerr’s, the oldest family-owned jam maker in England. They used digital marketing to showcase their family values, the tradition of the brand, and how to use Duerr’s products in innovative ways. This campaign contributed to the re-branding of the company and Duerr’s now owns 70% of the domestic jam market, with overall company profits at £2 million.

Build your partner network

Capitalise on the skills of “digital natives”

Recent research suggests that family firms need to be more willing to consider external advice, particularly in the areas of innovation and technology. To expand your digital horizons, start by broadening your working ones. Using advisors such as UK Trade and Investment or joining your local Chamber of Commerce, are quick and simple ways to engage with businesses beyond your usual network, both in the UK and overseas. Local Enterprise Partnerships and Enterprise Zones can help partner you with digitally focused businesses. Also, many city councils will have their own offering in this area and you can join organisations specifically aimed at family firms such as the Family Business Place or Institute for Family Business.

Demographic changes are altering the learning opportunities available for younger generations in family businesses. While the impact of this has not been widely studied, my research shows that the second and third generations have more time to work alongside the first generation entrepreneurs. This provides the opportunity for family firms to combine wisdom passed down from earlier generations with new skills that are better adapted to the modern environment. Modern family companies are positioned to be more powerful and successful than ever before. At the same time “digital native” grandchildren can help family firms to develop their digital offer. Companies should capitalise on this in-house expertise.

Mister Blister, a company specialising in advanced packing technology, has been running for 20 years, but managing director Gary Briscoe knew that to gain more clients, the company needed to focus its approach to sales and production. Gary worked with the Digital Growth Department of the Business Growth Hub to create a new B2B e-commerce platform. Through the Business Growth Hub, Mister Blister managed to secure £3,000 of funding. Gary explains the significance of this support: “In these austere times, funding contributions are invaluable and have enabled us to complete our e-commerce programme, which is now bringing additional business into our company.”

Article: Dr Marie Griffiths Director of the Centre for Digital Business Going Digital: Unlocking the potential of North West SMEs

www.salford.ac.uk/business-school

Joanne has also worked closely with Eveolution, an initiative helping female entrepreneurs learn the digital skills they need to build profitable and successful businesses. Joanne recognises how difficult investing time in digital can be for working women balancing family commitments. Eveolution exists to help women from across Greater Manchester and Cheshire close the digital skills gap. It places a special emphasis on explaining super-fast broadband connectivity, which can improve scalability and profitability. The website features online workshops on topics such as “How to build an app in 12 hours”. 21


If you’re not digital you’re not sustainable

If you’re not

Digital

you’re not

Sustainable

There is a lack of understanding of the benefits of digital business, which is understandable given the rapid pace of technological change.

Why smaller retailers must harness the power of digital Embracing digital has become essential for all businesses interested in improving their longterm growth. One group that has struggled to respond to digital trends is small traditional high street retailers. We spoke with Dr Justin Bentham, Principal Funding and Development Officer at Salford City Council about how this has affected the North West: “ Retailers are at pretty much full capacity, small independent retailers have low staff numbers and find it difficult to make time available for additional digital activities beyond the day-to-day requirements of running a retail business.” This means investing time in websites or social media can seem like an impossible luxury for small retailers. It is easy to see how digital opportunities for growth are subsequently missed. Dr Bantham highlights: “There is a lack of understanding of the benefits of digital business, which is understandable given the rapid pace of technological change. Many people do not fully realise how quickly the world is changing.” Obvious examples of these missed opportunities are small retailers still without an effective web presence, neglecting to make stock available online and failing to engage with their customers on social media. As Dr Bentham points out: “There are numerous markets that high street shops can be missing out on without realising it.” Customers are increasingly shopping online and to access that market share retailers need to adopt a digital business strategy appropriate to their business. Going Digital: Unlocking the potential of North West SMEs

There is much that shopping centres can do to help retailers on their premises. For example, a strong centre WiFi service will help retailers market their products more effectively to customers. Shopping centres can act as digital hubs, providing potential for shared digital infrastructure for retailers, and the opportunity to explore new technology to improve back office functions such as stock control. Town centres are the beating hearts of communities and they should therefore be supporting community businesses to embrace digital as far as possible. Shopping centres could work together with smaller retailers to offer services to mimic Amazon’s “click and collect” service. The click and collect service allows customers to buy online and then collect from a shop, rather than waiting for the delivery at home. This could be organised through local shopping centres to provide busy customers with a vast range of products, sourced locally.

Article: Dr Marie Griffiths Director of the Centre for Digital Business www.salford.ac.uk/business-school

What can traditional retailers and businesses in the North West do to ensure that they are responding and adapting to the digital age? Salford City Council has worked together with Salford Business School to help the sector answer this question. In June 2015, they ran a Digital High Street Breakfast workshop for local retailers who wanted to find out more about social media and e-commerce. This provided an opportunity for owners to network with colleagues from the retail sector and learn about how technology can benefit their businesses. Salford City Council has also approached business owners directly to ask them about their current issues and offer advice. There are business support products and services available in Greater Manchester, for example through the Greater Manchester Business Growth Hub, and the challenge is how the retail sector can access and benefit from the support available. We’ve seen great results. Adam James Hairdressing in Eccles, Salford, is a strong example. Its online booking system puts customers at ease and the company communicates with customers via social media platforms including Facebook, Twitter, Google Plus and Stumble Upon. The firm regularly posts original content including photos and responses directly addressed to each customer on Twitter and Facebook. Its website and social media offer its customers a breadth of choice in how they want to interact with the company and the business thrives as a result. 23


GROWING PAINS Is the digital sector growing too fast?

UK digital companies and start-ups are growing in size and scale, but a massive 98% of them still fall under the bracket of ‘SME’, according to Tech Nation’s Powering the Digital Economy 2015 report. That makes digital SMEs massively important to the UK’s economy. It is a sector that has always been renowned for rapid growth, development and innovation, but is it growing too fast? Are we on the verge of another tech bubble and what happens if it bursts? Are these even the right questions to be asking when looking at digital growth? Instead of focusing on the negative, I argue that we should be examining individual businesses and helping them prepare for success, rather than contemplating failure. Digital SMEs: rather than worrying about a tech bubble bursting, focus on strengthening and stabilising your business. Diversify your skill set and that of your team (if you have one). A fundamental flaw that many digital start-ups struggle with is that the founder wasn’t prepared for all the different aspects of running a company. If you simply focus on building the technology or developing an app, what happens when you do hit upon that eureka moment? Suddenly demand outstrips supply, affecting production and productivity. This impacts quality control, leading to reputational damage. This snowball effect takes many small businesses and start-ups by surprise.

The UK’s digital sector is booming. There are nearly 1.5 million digital jobs nationwide with digital employment forecast to grow by 5.4% in the next five years. In Greater Manchester alone digital employment has expanded to over 56,000 and, according to Manchester Investment and Development Agency Service (MIDAS), £3.5 billion has been invested to support Manchester’s digital and technology infrastructure.

Going Digital: Unlocking the potential of North West SMEs

To avoid this, it is important to recognise the significance of all business functions. Focusing on product development and delivery whilst neglecting other aspects of the company may contribute to its failure. Yes, growth will be achieved by the quality and distinctiveness of your business’ offering, but to sustain and build on that success means having a solid business plan as a foundation. You need to find a balance – entrepreneurs shouldn’t micromanage their teams or spread themselves too thinly. You cannot try to control every aspect of your business in minutia but you can’t entirely disregard elements either. That is why it is so important to be aware of your strengths and limitations. You can then surround yourself with people or services to fill in the gaps, helping you grow in a structured and controlled way. Then, if the tech bubble does burst, your company won’t go pop.

www.salford.ac.uk/business-school

To avoid your bubble bursting, here are some tips on accommodating business growth: Where do you need help? Consider your weaknesses as well as your strengths – this is a skill often overlooked in SMEs. If your strength lies in product development and delivery then let that be your focus, but don’t neglect other aspects of the business. You can outsource everything from marketing to technical services, so identify where the firm needs help and put in place the right support mechanisms. Collaborate rather than compete Working together is key, not just with your team but with fellow SMEs in the sector. Tech clusters are springing up across the UK; allowing digital and creative businesses of all shapes and sizes to pool resources, work together and share services and knowledge. Embrace this new way of working. Clusters such as The Sharp Project in Manchester mean everything from digital marketing agencies to creative production companies are situated under one roof. Trade ideas and services and reap the rewards together. Look globally We talk about digital business being the global sector, but many new digital SMEs get caught up in invisible and self-inflicted local, regional and national boundaries. Whilst it is important to establish stability for your business, a parochial perspective can hinder its development. Sometimes a product may not be suitable for the domestic market, but could be a hit in populous regions such as China and India. Thinking globally doesn’t mean ignoring the ‘local’; it is about exploring the options available to you. Working with partners such as UK Trade and Investment can help your SME look beyond national borders. Article: Gordon Fletcher Interim Dean of School

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Get in touch At Salford Business School we recognise that SMEs play a critical role in innovation, advancement and sustainable development worldwide. We are committed to supporting economic regeneration regionally, as well as nationally and internationally. We are able to offer SMEs expert advice, addressing skills gaps as well as providing resources and networking opportunities, and we would love to hear from more North West SMEs. You can follow our Salford Business School blog to stay updated with all of our initiatives and you can contact us via our website: www.salford.ac.uk/business-school and phone line: +44 (0)161 295 5000. We look forward to hearing from you.

Going Digital: Unlocking the potential of North West SMEs

www.salford.ac.uk/business-school

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Salford Business School The Crescent, Salford, M5 4WT, United Kingdom. +44 (0)161 295 2222 course-enquiries@salford.ac.uk www.salford.ac.uk/business-school

Going Digital  

Unlocking the potential of North West SMEs

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