Small businesses using digital technologies report major performance gains, with nearly 90 per cent of those using digital tools seeing increased sales and reduced costs, according to new research by the International Trade Centre (ITC).
 
The most advanced users of digital tools – called “expert users” – see the greatest gains: They are nearly five times more likely to increase sales and 12 times more likely to reduce costs than less digitally advanced firms, according to the ITC flagship report, SME Competitiveness Outlook 2025: A Digital Transformation Roadmap. Businesses that are expert users of digital tools are also twice as likely to innovate or improve product and service quality.
 
However, despite the benefits of integrating digital tools into their business, many small firms are unable to do so. Without urgent support, ITC said they risk being left behind, widening the divide between businesses of developing and developed countries, and deepening inequalities within countries, between small and large, women-led and men-led, and youth and non-youth-led companies, making it more difficult to tackle environmental, social and economic challenges.
 
Released on July 23 during the first-ever Global SME Ministerial Meeting in Johannesburg, the report drew on survey data from about 7,400 firms in 78 countries to highlight data, trends and recommendations for policymakers and businesses.
 
The extent to which firms are able to go digital depends heavily on their surrounding environment. The report found that in digitally ready economies, nearly 60 per cent of firms are expert users of digital tools, triple the rate of those in less prepared countries. Digital readiness means access to infrastructure, skills and supportive regulation. Without these enablers, small firms often struggle to keep up.
 
In less supportive settings, ITC observed that large firms are 2.5 times more likely to be expert users than small ones. Male-led businesses are 1.5 times more likely than female-led ones to be expert users, while youth-led firms trail behind. These disparities revealed how firm size and ownership matter, especially when the digital environment is weak, and how businesses that are smaller or led by women and youth require tailored support.
 
The ITC report noted that these gaps narrow significantly in economies with strong infrastructure, a digitally skilled workforce and digital-friendly policies.
 
While countries must invest in infrastructure, skills and regulation to enable digital transformation, the report showed how firms can take action to make up, at least partially, for what the environment lacks.