An annual survey on technological adoption among European and American SMEs revealed that only UK SMEs may be out of business in five short years if they don’t adapt.

The study by software provider Exact, highlights a gap between the 38 per cent of UK SMEs that believe that they may go under if they don’t have a digital strategy in place, and the 2 per cent of SMEs that have actually done something about it.

One of the key highlights of the research was that two thirds (64 per cent) of all UK SMEs face competition from new digital players in their space. Yet, surprisingly, only 6 per cent are investing in new technology to keep up with this digitalisation movement and retain market share.

“Digitalisation is going to be key to ensuring you are not only efficient, but remain competitive in today’s highly challenging environment, Gavin Fell, general manager of Exact Cloud Solutions UK, said.

Some of the primary focus areas for the 56 per cent of SMEs planning for growth are investing in new technologies and talent. In the UK, SMEs are looking to online sales (30 per cent), partnerships and channel sales (26 per cent) and hiring talent (27 per cent) to boost their businesses.

Tech tools like cloud computing, data analytics and reporting are gaining traction among the SME community, according to the study, with 65 per cent believing that technological changes are going to have a strong impact on the competitive landscape in the UK in the next three years.

“The use of technology to deepen business insight means that the wider SME economy is entering a new period of rapid growth and efficiency,” said Erik van der Meijden, CEO of Exact. “As customer demands become ever more stringent, we are seeing entrepreneurial businesses taking advantage of digitalisation to broaden their service offerings.”