MINNEAPOLIS–(BUSINESS WIRE)–Small businesses that use data to help make decisions are more strongly growing revenue as compared to their counterparts who use data on a limited basis, according to new research from Exact and Pb7. The findings show that businesses across the U.S. and Europe who lean on data insights reported revenue growth of 21 percent in the last financial year, as compared to 9 percent for businesses reporting limited use of data. Data-led businesses also experienced a net profit margin of 22 percent, versus 14 percent achieved by small businesses in which data has a limited role.
These findings are detailed in a new report released today from Exact, a global frontrunner in business software in the cloud for small- and medium-sized businesses. The company’s second annual global research report, “Small Business Barometer 2016,” examines the business and industry challenges that small wholesale distributors, manufacturers, accountants and professional services firms face on a daily basis, and to what extent they are using technology to combat these hurdles. Pb7 surveyed small businesses in the U.S., Belgium, France, Germany, the Netherlands, Spain and the U.K. to create the report.
“Our new global research underscores what we already have seen among our customer base – that data plays an instrumental role in helping businesses make smarter decisions. Those that don’t take advantage of the wealth of insights data can provide are falling behind their peers,” said Logan Paquin, director of product management at Exact. “Small businesses need to pull out all the stops now in order to evolve their business strategies, differentiate from competitors and truly optimize their business models. We’ve seen that technology that automates processes and provides real-time data insights can help on all fronts.”
Key findings from U.S. small businesses across industries include:
- 57 percent of U.S. small businesses are finding themselves up against new digital competitors
- In the face of strong competitive pressure, 21 percent of those surveyed in the U.S. anticipate being out of business in five years if they don’t radically change their business models, yet only 2 percent are currently taking steps to make radical changes
- Only 12 percent of small businesses are using new technology to hold on to market share – with 24 percent turning to delivering more customer value to compete
The Small Business Barometer 2016 drilled down into findings among small wholesale distributors, manufacturers and professional services firms. Key findings by industry from respondents in the U.S. include:
Manufacturing – Struggling to Innovate While Controlling Costs
- Small manufacturers in the U.S. had the lowest percentage of on time deliveries (72 percent) as compared to their peers abroad. The impact of delayed orders in the U.S. is significant – 25 percent of customers don’t come back when a delivery is late.
- Cost control, cost reduction and finding new customers were the top three business challenges cited by manufacturers this year.
- Within the manufacturing industry, respondents named product development and innovation, insights into costs of materials and processing and efficient inventory management as the top three challenges.
- 53 percent of manufacturers feel that better insight into prices for materials from suppliers would help them gain control over costs of materials and processing.
- Orders for small series are on the rise – 56 percent of small manufacturers anticipate the market evolving toward more orders, delivered faster and in smaller series.
Wholesale Distribution – Turning to Hard Work (Not Software) in the Face of Strong Competition
- With their position on the supply chain increasingly being threatened, wholesale distributors named competition from suppliers through direct sales channels as their number one industry challenge. Pressure on prices due to online competition was the second top industry challenge named by respondents.
- Despite competitive pressures, the number one way that wholesalers are trying to improve their margins is by working hard and selling more, followed by increasing prices.
- Just four percent of respondents are currently looking to purchase software to optimize internal processes as a strategy for improving margins, down from last year’s 12 percent.
- 33 percent of wholesalers named on time delivery as a key industry challenge. 10 percent of respondents blamed inaccurate insight into stock for delayed delivery times.
Professional Services – Despite Gains in Automation, Project Management Remains a Focus Area
- Professional services firms are primarily focused on their customers – when considering business challenges, new customer acquisition and improving customer satisfaction were the top two areas named. This was a shift from top challenges named in 2015, which included cost reduction and cost control.
- 41 percent of respondents struggle with delivering projects on time and on budget. Nine percent of hours spent on projects turn out to be un-billable time.
- Firms have made some progress in automating project management in the last year – 27 percent of respondents confirm that they have one integrated, end-to-end system in place for all project management administration, up from 20 percent last year. For others, project management is primarily a combination of spreadsheets (26 percent) and spread over multiple software programs (27 percent).
- At the same time, 62 percent of respondents would like better insight into the statuses of their projects. 18 percent agree that more than one in ten invoices are incomplete or contain an error.
All three industry reports are now available for download here:
- Small Business Barometer 2016 for Manufacturers
- Small Business Barometer 2016 for Wholesale Distributors
- Small Business Barometer 2016 for Professional Services Firms
As commissioned by Exact, Pb7 Research, a global technology research firm, conducted 2,594 total interviews of small businesses in Belgium, France, Germany, the Netherlands, the U.S. and the U.K. In the U.S., 337 small businesses (companies with fewer than 50 employees) in the accounting, manufacturing, wholesale and professional services industries were surveyed in February and March 2016 via a web-based panel.
Exact builds business software for SMEs and their accountants, servicing 300,000 businesses in more than 15 countries. Our innovative technology is aimed at specific business needs, providing an overview of today and insights into the opportunities of tomorrow.
Exact inspires businesses to grow. Our 1,600 employees love, share and support our customers’ ambition. Like them, we aim high. Like them, we aspire to lead the way. That’s how we know it’s a bumpy road to success. And that’s why we build software to help smooth it out, enabling our customers from all over the world to grow.
For more information visit: exact.com/us.