How to Overcome the Top 5 Digital Transformation Challenges for Small Businesses

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For a small business owner to survive in today’s digitally connected world, you must be able to adapt. In other words, you need to be willing to take on a digital transformation for your business to stay competitive.

Now, making the transition from traditional storefront to digital initiatives won’t be without its challenges. And very similar to how you started your business by developing a business plan, the key to success for your digital initiatives, is to create a digital strategy.

Why go digital?

To understand why you would go digital, it’s best to explain with an example and one from a traditional business that made brilliant steps into leveraging digital tools to its advantage.

The world’s largest furniture retailer since 2008, among the reasons that made IKEA successful throughout all these years, is their superb grasp of its target audience, and the digital strategies it uses to make a lasting impression on the minds of their customers.

A few years ago, IKEA launched a new integrated campaign known as “Where Life Happens.” This concept was intended to show that IKEA products not only help fix functional problems for their customers but also help solve or improve emotional problems as well.

By experimenting with Google searches, IKEA renamed its products after frequently Googled problems that those products can solve. This creative campaign was released to prove that the company’s products have always been inspired by how people live in the real world.

In addition to this, another key practice that made IKEA an authority in the digital realm is its clever use of marketing strategy to trigger a response or action from their customers and get them engaged. IKEA has a YouTube video series, called IKEA’s Home Tour, which customers can turn to to find inspiration and solutions to home furnishing challenges.

As you can see, with the plethora of available platforms and tools, you have free rein to get creative with your digital strategies.

What are the benefits of digital transformation?

You’ll be where your audience is

These days, almost everyone has a smartphone, which they use to search for brands and products to purchase or learn more about. Mobile internet usage has made its way to the everyday life of smartphones and tablets, allowing people to access and share information on the go. According to Statista, mobile devices (excluding tablets) accounted for 50.44 percent of web page views worldwide as of May 2020.

Also, almost 4.57 billion people actively used the internet in April of 2020 alone, which covers 59 percent of the grand total of the world’s population. More than that, it is also expected that nearly half of the overall global population will be turning towards social media platforms by the end of this year.

  • 3.80 billion people were active social media users in January of 2020 alone
  • The United States takes the third spot for the highest number of internet users in the world, after China and India

In addition to the rise in the number of internet users around the world, there are other advantages to going digital:

The ability to understand your target audience

Everything users do online leaves a footprint and this data is readily available to you using different analytics tools. This enables you to better understand your audience and make intelligent, data-based decisions for your digital marketing campaigns.

The ability to reduce operating costs

Depending on your needs, there are technological advancements you can utilize to cut costs. Chatbots, for example, can be built into your business’ Facebook Messenger. This allows you to immediately respond to simple customer queries 24/7.

The ability to measure your business success

Again, there are a number of analytics tools you can use not just to understand your audience, but also to measure how you’re performing. When you have a clear understanding of how your efforts are doing, you can improve what doesn’t work and build on what does.

How to define your digital transformation strategy

Digital transformation refers to the creation or optimization of existing business models and processes with digital technology. This can include everything from company culture, written policies, customer experience, marketing and sales, product development, and a number of other business functions.

Your strategy is then how you leverage that technology to improve the performance of your business in one or multiple of those areas. To succeed in the path of digital transformation, you must be able to develop and set a smart, comprehensive, and successful digital strategy that aligns with your current business strategy. It’s the essential first step towards digital success.

Eventually, your digital strategy should successfully integrate with your business strategy. But how do you get your business to that point?

Know why you’re going digital

To define your digital strategy you need to first know why you’re going digital.

Are you looking to minimize overhead costs? Establish a new sales channel? Improve internal communication? Save the planet by consuming less papers? Make sure that you firmly define why and that any digital initiative you consider firmly aligns with your business goals.

Eventually, as you take steps in your digital transformation your digital strategy should seamlessly integrate with your business goals. But for now, keep it separate and let your overarching goals inform your direction.

Think big

Don’t be afraid to think big when approaching your digital strategy. It can be easy to become overwhelmed with different platforms, processes, and the overall potential but don’t let that deter you. Embrace the possibilities and explore every digital avenue to better understand what it can do for your business.

Now here’s the thing, you want to think big, but narrow your execution. It can be dangerous and potentially costly if you invest in too many digital channels early on. Remember, this is the first step and you don’t want to spread yourself thin.

So instead of investing in new technology for every department, dumping money into digital ads, attempting to manage multiple social media accounts, start small. Identify 2-3 valuable use cases where your business could benefit from the change most. You’ll have an easier time managing your priorities and focusing on short-term results you can iterate on.

Hire experts

If you can afford it, you have the option of bringing in experts to your organization so that you can focus on what you do best and let the experts do their thing. It’s important to note that you don’t necessarily have to hire people as full-time employees. You can outsource specific tasks like web development, or social media management if that makes more sense to what you need.

Establish key metrics

Of course, you’ll need to set benchmarks for determining success. Depending on the goals you set, these metrics will guide you along each step of your digital campaigns. So whether it’s getting a certain number of email opens, getting a certain number of views and engagement for your social posts, or reaching a particular number of visitors to your landing pages, you need to establish key metrics that will both guide and determine how you’re performing.

These are just some of the basic steps you’ll need to keep in mind when looking to create a successful digital strategy for your business. This will help provide a clear structure on why you’re actually going digital. And when you understand why you’re doing something, it makes it easier to figure out how to best do it.

Top 5 digital transformation challenges you’ll face

On the journey to digital transformation, there are a number of obstacles and challenges that small businesses and startups are likely to face along the way. Here are four of the most crucial digital transformation challenges, and how you can solve them.

1. Tough competition

Obviously, the biggest challenge small businesses and startups are more likely to face on the path to digital transformation is competition from other small businesses and startups. In order to survive and gain an advantage in this increasingly competitive space, you’ll need to take risks and set your digital ambition high. You’ll also need to keep track of the shifting business climate and put your finger on the pulse.

2. Using technologies that don’t work

Another common challenge small businesses and startups encounter along the path of digital transformation is investing in technologies that don’t work well for them. Although, you may not be able to recognize that as a problem, in the beginning, it can be very difficult to change things up later on.

As a small business owner, you’ll need to pay attention to integrating necessary solutions in a way that can scale with your business as it grows. There exists an abundance of tech vendors out there that can provide flexible tools and platforms that make it easier for you to customize and gradually integrate more capabilities.

Remember that digital transformation doesn’t take place all at once, but it’s always an ongoing process, so there’s no need to rush.

3. Internal communication

One of the biggest challenges small businesses and startups encounter when planning to implement digital transformation is the lack of communication among employees. Since digital transformation requires the optimization of company culture and employee experience, it’s very important that you communicate with your employees and share your suggestions.

4. Gather and make use of customer data

Finally, another digital transformation problem most small businesses and startups face is not collecting customer data such as their location, behavior, and engagement. A business’s ability to stay competitive in the digital economy requires making faster and forward-looking decisions. There are many ways to leverage customer data that can make small businesses smarter, efficient, and productive.

The solution to this problem is to implement deep learning to help your business improve data collection and enhance decision-making capabilities. Small businesses should also implement data analytics to provide insights into all aspects of their businesses, which could eventually include things like machine learning to revolutionize the way they market to their target audience.

5. Letting short-term wins drive your strategy

There’s a time and place for appreciating short-term wins. For example, if you’re just starting with your social media presence, getting X amount of followers is good. But you can’t get fixated with these types of vanity metrics.

Short-term wins are essential to a digital strategy, but you always need to remind yourself to focus on long-term goals. So while building a following may be the initial step, you need to quickly move on to engaging your following, building relationships, and ultimately, converting those followers.

Adapting to a digital landscape is worth the difficulty

There you have it! These are four of the most crucial digital challenges small businesses and startups are more likely to face on the path to digital transformation. As a small business owner, you’ll need to consider tackling these issues in order to build more sustainable relationships and understand the needs of your customers.

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Aaron Chichioco
Aaron Chichioco
Aaron Chichioco is the managing editor of He loves to write about online marketing, ecommerce, and web design. He has a vast experience in overseeing daily operations of several online businesses since 2011.
Posted in Management

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