Risk versus reward – is it a good idea for my company to make a strong digital investment?

As high street sales continue to lose out to the online retail marketplace, businesses are increasingly seeing the merits of going digital with all or part of their operations.


Research conducted by the Boston Consulting Group (BCG) has revealed that the UK is the most internet-based economy in the world, with the internet contributing to 8.3% of the country’s economy.


The UK’s internet economy is also set to grow at an annual rate of 11% each year to 2016, reaching a total value of £221bn.


With the UK’s digital sector tipped for a boom in the coming years, it seems that now is exactly the right time for businesses to consider making a strong digital investment.


This is both to ensure that businesses are able to keep up with the latest developments in the marketplace, and to reap the rewards of a sector that could potentially help generate greater revenues – internet-focused SMEs have generated an annual growth of 12.5% in revenue over the last three years, according to the above research and we have mentioned previously the benefits of super-fast broadband for SME growth.


However, as with any investment, there are risks attached, and no business can be assured that a significant digital investment will have an immediate impact on their balance sheet. But if you are a struggling business there can be no denying that the opportunities for growth are there when going online. This is certainly something that any business turnaround expert that you may recruit to assist your business will look to recommend.


For businesses who are thinking of making the leap into the digital sector, here are just some of the benefits that could tip the balance.


Reduced overheads


Operating an online-only business may mean that less equipment, office space and even staff are needed.  This will act to reduce overheads, and mean that more of a business’s revenue can be ploughed back into developing the business as a whole.


Widening your customer base


A digitally-based business can set up its operations anywhere in the world, and still reach out to a customer base that may be hundreds of miles away. As an example, online retailer ASOS has used this model to great success, expanding into markets such as Russia and China, to add to its existing customer bases in the UK, US, France, Germany and Australia.


Heightening awareness of your brand


An investment in digital marketing can also help to heighten awareness of your brand, through popular mediums such as social media and online advertising. Recent research by the Internet Advertising Bureau (IAB) has shown that for every £1 businesses invest in social media, they can achieve a potential return of £3.34.

By Phil Smith

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