By Jim Conroy, CEO of The Neat Company
Digital transformation is the process of leveraging internet-based tools and technology to improve all aspects of a business. It needn’t be applied solely to large organizations. Using technology for your digital transformation on small business bookkeeping is a prudent action that can elevate it from small to significant.
Key Takeaways:
- Digital transformation is a process that leads to accuracy and efficiency.
- Small businesses grow faster than competitors when they adopt the process of digital transformation.
- Your competitors may not have incorporated digital transformation yet.
Like bookkeeping, digital transformation is a process that’s designed to enable optimal business performance. By committing to take advantage of technology to do things in a new way, the challenges of any business — from those with a trillion-dollar market capitalization to those operating out of a garage — can benefit from efficiency, deliver value to customers, and drive growth.
Big companies began to implement digital transformation around 20 years ago. Their size meant they could spend the money to get the tech and the teams they needed to succeed. But even a home business can benefit from a digital makeover.
How to Determine You Need a Digital Transformation
Many small businesses shy away from technology. One reason is cost; they aren’t sure they can justify it or they just don’t have the money. Another reason is fear of the ability to learn the technology. The thing is, technology tends to pay. According to the U.S. Chamber of Commerce’s Technology Engagement Center, 4 out of 5 businesses with very high tech usage report growth in sales, employment, and profits.
There are two main reasons to look at giving your business a digital transformation:
- You’re growing (or want to grow). Technology is like an accelerator for a business that’s already growing.
- You’re less profitable or productive. If your business is moving in the wrong direction, the efficiency digital tools provide can save time and money.
A small business can still undergo a digital transformation to meet its challenges and enable new approaches. One of the most onerous tasks most businesspeople must navigate is bookkeeping. Happily, there are a number of tools that can reduce that burden. These include cloud-based accounting software or a document management system (DMS) such as Neat. Look for those that leverage machine learning, and artificial intelligence. These can automate routine bookkeeping tasks. Such software free you of some or all of the burden of bookkeeping by streamlining invoicing, tracking your expenses, and reconciling your financials, you’ll make fewer (or no) manual errors and be more efficient. Customer relationship management tools such as Salesforce can systematize your search for new customers and convert them.
Business growth comes with understanding your financial landscape. When you convert your business from manually entering data into a spreadsheet (or even pencil-and-notebook data entry), you’ll gain insight that helps you identify and fix problems or, better, recognize and act on business opportunities. Being digital also means you can examine your financials or generate reports in real-time.
Smaller and local businesses that linked their bookkeeping to new tech approaches survived and even grew during the pandemic. Businesses that rely on online sales can use software to automatically enter their sales and banking data into their bookkeeping system. Service-based businesses like landscapers or contractors can track jobs and manage client payments with such systems. Restaurants can have their sales and cost of supplies efficiently captured, then analyze the data to identify most profitable items or operating days.
The Value of Digital Transformation for Home Businesses
When you’re operating a business out of a garage, a den, or from a dining room table, every advantage helps. By utilizing digital tools whenever you can, you make it possible to do more with fewer people (or even yourself only). Technology can help you level the playing field a little with larger competitors, giving you a shot at business you might not have been able to before.
But digital transformation is more than buying software. It’s changing your mindset to run your business using the advantages technology offers.
You’d probably like to grow your business. One of the advantages of technology is accuracy and speed. According to one study, small businesses engaged in digital transformation saw eight times the revenue growth of those without digital efforts. In part, this is because you’ll be better able to adapt.
Remember that digital transformation is an ongoing process. Here are some steps you should expect to take:
- Make your commitment. Analyze what you can do better and decide to do it with technology.
- Determine how long you’d like your launch to take. This will depend on your available time and resources.
- Identify what needs to be automated first. If you’re forgetting to send invoices, a program that enables invoicing should be high on your list.
- Find the right technology. If you’re crafting a small number of items each day, you probably don’t need to buy an enterprise-sized cloud-based inventory solution. Look for tools that incorporate security for your safety and that of those you do business with.
- Start small and learn. Once you’ve got the hang of your first foray into digital transformation, assess your successes and change what should be improved.
- Do it again. Remember that digital transformation is an ongoing process.
Your Future
Don’t wait for problems before implementing digital transformation on your small business bookkeeping. Efficiency, productivity, competitivity, growth, and cost savings will result. You’ll find yourself more flexible because you have time to react to changes that affect your business. And you’ll find your customers are happier, too, because their interactions with you will be smoother and more rewarding.
Whether it’s keeping your books or tracking your inventory in the cloud, now is the time to get ahead of your future with digital transformation.
