Two million small firms are missing out on business due to a lack of digital skills and online presence, a report from the Department for Business, Innovation & Skills (BIS) and Go ON UK has revealed.
The research showed 39% of small businesses and sole traders are missing out by not having a website, with 55% of the public admitting they find it difficult to support local small firms if they have no online presence.
According to the findings, more than half of customers (52%) visit search engines first when looking to buy from local businesses – a figure that was nearly double the number that ask for word-of-mouth recommendations.
In 2013, Cyber Monday – a term for the Monday following Thanksgiving in the US – saw 115 million visits to retail websites by UK internet users.
In the run up to 2014's Cyber Monday – which falls on 1 December – the government has announced its plans to support small businesses and sole traders to increase their digital skills.
More on IT skills
The plans include £2m in funding for 22 local enterprise partnerships to help local small businesses increase their online presence.
A digital TV channel in Manchester will be launched to provide business advice, supported by events and networking sessions. A campaign to bring small business owners new resources and advice has also been launched online.
Working with digital skills charity Go ON UK, the government will be providing resources designed for small businesses.
Business and enterprise minister Matthew Hancock said thousands of potential customers are searching online for local small businesses and, without an online profile, those businesses will lose out.
“To make sure consumers get the best deal and small businesses spread their nets far and wide, the government is investing in expert advice to help them do more online," he said.
“I am committed to making the UK the best place in the world to start up and grow, and this is integral to achieving that.”
Finding a company online vital to giving custom
We believe it is crucial companies like Google and the government invest in programmes that show small businesses how easy it is to get online and start reaping the rewards of the digital economy
Eileen Naughton, Google UK
The research surveyed just over 2,000 people and revealed 73% of respondents believe finding a company online is a very important when deciding to give custom.
Furthermore, 57% said they would be reluctant to spend with a business if they could not find any evidence of them online. More than two-thirds (39%) of respondents said they have purchased goods and services outside of their local area because they could not find local companies online.
Government entrepreneur-in-residence Simon Devonshire said British businesses should consider having an online presence as more important than having an office landline telephone number.
“Online is the new landline," he said. "A landline number used to be a mark of authenticity for businesses. The move to a digital economy has meant consumers are more likely to trust a business with a website and consider a business more credible if they offer the ability to transact seamlessly online.
“Government research suggests nearly two million UK businesses are not online, and of those that do have an online presence, more than two-thirds are not transactional. I cannot think of a business to whom being online is not now vital to its trade, irrespective of its ambition to grow.
"I think those businesses that embrace the digital opportunity are improving their opportunity to reduce costs, to scale-up, and possibly even export – giving a further boost to the UK economy."
Lack of digital skills making businesses less competitive
Go ON UK CEO Rachel Neaman said 31% of small businesses in the UK lack basic digital skills, making them less competitive than many of their peers.
"The UK is embracing technology more and more with new jobs and new businesses being born on the web – yet just half of small businesses and charities have a website," she said.
“Go ON UK welcomes the government’s investment in addressing the digital skills gap for small businesses. We are delighted to support the Business is Great initiative by partnering with BIS to enable small businesses and sole traders across the UK to realise the impact that developing basic digital skills can have on their business prospects.”
Google UK managing director Eileen Naughton said the internet is playing a key role in helping companies of all sizes across the UK “reach new customers, manage marketing expenses and use data-driven consumer insights to help their business grow.”
She added: “We believe it is crucial companies like Google and the government invest in programmes that show small businesses how easy it is to get online and start reaping the rewards of the digital economy."