Digital technology has revolutionised how many companies are structured and how they do business. These digital businesses are changing how businesses interact, how they’re organised, and how they reach consumers in order to disrupt entire industries and reach broader markets.
Besides eliminating inefficiencies and opening up new possibilities for entrepreneurs, these changes have also brought a whole new list of challenges that more traditional businesses didn’t have to worry about. To attempt to tackle these, digital businesses have to work to creatively develop tools and create new strategies to help them succeed in their digital environment.
Decentralised organisations and communication
Traditional businesses bring their labour force to a central location and work from 9:00 to 5:00. That basic structure makes time management relatively simple. Digital businesses, on the other hand, are increasingly turning to remote workers and contractors who might be located halfway around the world.
Doing this gives these businesses access to skilled workers that aren’t available in the regular labour market, because of geographical distance, odd hours of availability, or other factors. These workers often can’t take on more traditional employment, or they might live somewhere with a lower cost of living, so businesses tapping into this market have a cost advantage. Furthermore, they need less equipment and less office space, which can drive costs down even further.
This decentralised structure often comes with complex schedules for individual workers, which can make it very difficult to maintain good real-time communication within the organisation, as well as with clients and suppliers. This can make it much more difficult to keep everyone oriented toward the same goals than in a traditional organisation. To deal with that, businesses need to go out of their way to schedule interactions, meetings, and updates well ahead of time, and to closely monitor progress on various projects by using complex tools such as cloud-based Enterprise Resource Planning (ERP) software.
Moving money inexpensively
Digital businesses are often relatively small, but they operate on a global scale rather than within small local economies. Not only might they hire employees in other countries, they often also buy and sell goods or services to a widely dispersed global market. As a result, they need to make a very large number of international transactions, which puts them at the mercy of the foreign exchange market and the financial institutions that are handling those transactions.
The exchange and transfer fees resulting from those transactions can quickly eat into a business’ profit margin. This is because many services charge percentage-based fees, while others charge flat fees that can also add up quickly depending on the number of transactions.
Fortunately, the massive rise in the number and scale of foreign transactions over the last several decades in conjunction with the digital revolution has already built a solution. Specialised foreign exchange and transaction services like Fifo Capital’s partner HiFX help businesses make free or very low-cost payments. That’s because transactions can be carefully timed to occur when rates are particularly favourable, allowing these institutions to generate income from the transaction itself, rather than by charging the customer a fee.
More limited marketing options
Businesses that are designed to operate mostly or entirely within a digital space face a massive marketing challenge, which is that they can’t passively benefit from their location in an effective way. Traditional businesses can put up a sign to attract walk-in customers, and they can appeal to local consumers on social media with minimal effort. Highly digital businesses aren’t quite “local” anywhere, and every lead has to be actively found and converted until the business is already well established enough to appear in search engines.
It’s unlikely that a brand new no-name business would generate significant interest on its own authority. Digital businesses exist in a crowded space where novelty is the norm, and visibility is determined most importantly by prior success.
To deal with this, digital businesses entrepreneurs have to take an even more proactive approach to generating leads than traditional entrepreneurs do when they launch a business. To avoid stalling right out of the gate, it’s critical to go in with a targeted and integrated digital marketing strategy, and the budget to support it. Further, businesses need to be prepared to give that strategy time to bear fruit, which could mean operating with relatively low revenue for an extended period.
While these challenges might seem like a big unnecessary headache to many entrepreneurs, the digital age is here to stay. Businesses in general will continue to lean toward transitioning to a more digitally-based business model, because it’s simply more efficient for many industries. Those who succeed best at tackling these challenges right now have a chance to disrupt their industries and establish themselves during this critical transition period.