The Minnesota Chamber and its Grow Minnesota! partners asked 360 small and medium-sized businesses how digital technologies are impacting their recovery and future growth. Here’s what we learned

A growing body of literature shows that digital technologies are driving performance outcomes for small and medium-sized businesses (SMB’s) in the U.S. and around the world. 

The COVID-19 pandemic only accelerated this trend. As a report by IDC and CISCO states, “Once considered a way for companies to gain competitive advantage, digitalization has now become a matter of survival. The COVID-19 pandemic has exacerbated the digital divide that was already present in the small business market, and it is forcing companies to accelerate their digitalization.”

Helping business compete in the digital economy is thus a critical building block for Minnesota’s economic recovery and long-term economic growth. 

However, research to-date on digital technology trends among SMB’s has occurred mostly at the national and international level. The Grow Minnesota! program set out to gain insights on how Minnesota’s own small and medium-sized businesses are investing in digital technologies and what they need to better leverage these tools for innovation and growth. 

Partnering with over a dozen local chambers and economic development groups, Grow Minnesota! surveyed 360 businesses this July-August and conducted in-depth interviews with around 20 small businesses, digital tech suppliers, and business support organizations to better understand this issue. 

Here is an initial glance at what we learned:  

Initial Findings

• Nearly 60% of SMB’s have reached or surpassed pre-pandemic revenue levels. However, 16% are still more than a year away from full recovery. 
• 51% of SMB’s expect to increase employment and 59% expect to increase revenue levels over the next 12 months.
• Digital technology use and spending surged during the pandemic but is expected to moderate slightly in coming year.
• 61% reported significant or moderate increases in digital technology use last year.
• Over 1/3 of businesses increased their digital technology spend by more than 25% last year.
• However, only 1 in 5 are expecting to increase tech expenditures by more than 25% in the coming year.
• Businesses that view digital tools as a “core part of their business strategy” recovered to pre-pandemic revenue levels at a higher rate and experienced over 3x better employment outcomes than less digitally focused companies.
• SMB’s report relatively low use of advanced technologies such as artificial intelligence, Internet-of-Things (IoT), and supply chain software. However, businesses who do use these technologies report revenue gains at a higher rate than their peers who don’t. 
• SMB’s cite a.) lack of time to learn about digital tools, b.) uncertainty about ROI, and c.) cybersecurity threats as the three biggest barriers to adopting new technologies. Lack of digital skillsets among existing workers follows close behind.
• Businesses view employee skill development and education/training about emerging technologies as key levers to accelerating digital technology growth. They also cite peer business leaders and tech supplier/vendors as their preferred “go-to” resources for digital strategies/projects.

A full report detailing our findings will be released this month. Stay tuned for further insights, analysis, and resources on this topic in the weeks to come. 
 

Grow Minnesota!® helps businesses make valuable connections

We provide a valuable service by helping Minnesota businesses connect to resources that can address their business concerns. We refer to our partners as community and county-level resource experts. The Grow Minnesota! staff at the Minnesota Chamber provide direct assistance and foster connections between businesses and regional, state, and federal resources. 

A multitude of valuable resources is available to Minnesota businesses but many business leaders are either unaware of existing resources, or become frustrated after several attempts to connect to a representative who can address their specific concern. Grow Minnesota! is an expert connector and staff can help business leaders make the right connections faster. We do this in several ways.

What’s next? – New opportunities for Minnesota businesses via Grow Minnesota!

Our Grow Minnesota! visits and research results have identified a few key areas that could play a role in boosting Minnesota’s economy and also help with business retention. We will be actively studying how Grow Minnesota! can help in the following areas. More to come soon.

• Digital tools for small to medium-sized businesses
• Support and encourage entrepreneurship
• Business succession and transition planning