Digitalisation & Rural Ireland - The Figures - 96% of SMEs are Micro with fewer than 10 employees and by business demography are the largest form of business unit in rural counties (source - Seanad Public Consultation Committee Report on Small and Medium Sized Businesses in Ireland 2019). There are approximately 180,000 active businesses in Ireland registered with the Companies Registration Office which rises to 226,900 when sole traders are included (Seanad report). The 31 LEO offices, often located in the Council offices in administrative centres of the county, have a significant benefit for small business, according to their Impact Report 2021 7,158 businesses received financial assistance in 2021 while 60,344 people attended LEO training programmes.
The OECD found that “Ireland has many SMEs with low productivity....insufficient digital technology adoption” (‘SME and Entrepreneurship Policy in Ireland 2019’) but the pandemic saw an unprecedented mass mobilisation of digital across every part of Irish society and economy. Businesses migrated online, many for the first time, in direct response to the lockdowns (source .IE).
Digital assets and small businesses - "Out of sight, out of mind"
However these digital assets remain under utilised. Websites remain digital business cards, only 37% of SMEs with websites say they can take bookings or reservations through their websites. Less than a third (32%) can take sales orders or process payments through their website 75% of SMEs are E or F grade in digital intelligence (source .IE) reflecting a low presence in the ability to use software and digital skills to improve business productivity, analyse customer data, and promote an online presence. The pace of technological change is so rapid that some small business owners are experiencing learned helplessness and are opting out of digital growth.
The key mindset change needed is not so much ‘training’ owners how to use the functions of certain tools but creating a mindset of ‘how can I best achieve the outcome I need’ using digital. To help small business owners in this regard we must seek to change behaviours, to instil a mindset that these digital assets are the ‘invisible workforce’ of the business.
Finally, in light of the fact that micro businesses are the predominant business form in rural areas, isolation from networks, resources was a factor noted by the Seanad report. Micro businesses of all types have the highest potential to evolve and be sustainable when they are embedded in a local ecosystem of customers, supports and resources. At DigitalHQ we believe that the future of our economies in Europe in the 21st century needs to be local and distributed. To optimise the best use of the fabric of our countries we need to use digitalisation to create symbiotic relationships between localities, traditional small businesses and innovation-driven SMEs. In essence, think clustering on a micro scale through the platform provided by the locality, at Digital HQ we call this model ‘Digital First Communities’.
For the purpose of this submission the challenges for micro businesses that are stopping businesses getting the skills they need can be summarised as:
Having a mindset that the physical (shop, products) takes precedence over the digital and as a result their investments in digital assets remain underutilised.
Are extremely time poor and often have insufficient time to divert to future proofing their business.
Are not sufficiently embedded in local ecosystems - while there was some progress on digital first empowerment of localities and their communities of small businesses arising from the pandemic this has not been exploited to anywhere near its potential.
Digital HQ recommendations in respect of Skills
The mindset of seeking a digital first approach to delivery of their products and services requires transverse skill development to complement training on individual products or tools. Furthermore we believe that any discussion of digitalisation of micro businesses needs to be in the context of the locality that micro businesses occupy (micro clustering).
Digital HQ recommendations to ensure micro businesses get the best from digitalisation:
Skills - Creation of a competitive LEO fund open to rural hubs to deliver digitalisation initiatives in their catchment area
To help micro businesses move from possession to capability in respect of digital assets we need to internalise the digital operating model (something we call the Digital Growth Mindset) by reaching the ‘long tail’ of micro businesses in rural Ireland.
When it comes to the high quality training programmes offered by LEOs it must be noted that LEOs have a county wide mandate and cannot be seen to support one locality in the county over another (displacement). We believe that Ireland’s network of hubs (262 hubs and rising) can complement the reach of the LEOs as they have the grassroots presence in localities. Therefore we are recommending the creation of a competitive LEO fund in each county for hubs to deliver digitalisation initiatives at the local level, an initiative that will help achieve the goals of the Department’s ‘Digital Ireland Framework’.
Digital Portal - Incorporating ‘Trusted Providers’ into the Department’s new Digital Portal that would encourage businesses to digitalise - The ‘invisible workforce’ of digital assets and tools available to micro businesses can be complemented by the increasing availability across Ireland of remote working professionals who can fill gaps in the small business owners ability to leverage digital. By working with hubs to identify providers of digitalisation services located in their hubs these trusted intermediaries can help to smooth the process of digitalisation for micro businesses.
A new Skillnet dedicated to the Social Enterprises that are empowering hubs across the country - Hubs are commonly managed by social enterprises, ‘businesses for social good’ and aim to be catalysts for the economic development of their locality. To maximise their economic impact in their locality and to advance the digital and green agenda they need upskilling and professional development of the type a Skillnet can offer. We recommend the creation of a Skillnet with funding specifically committed to the upskilling of the personnel of social enterprise led hubs. By empowering local and distributed centres of employment through hubs regional communities will be enabled to retain tech talent in localities and enable micro businesses to better engage with that talent. At the macro level, in the long term this recommendation can help reduce an economy’s dependence on a small number of mobile multinational corporations (MNCs) for economic growth as well as contributing to the Government’s green ambitions,as highlighted in the Climate Action Plan 2021.