At Xero, we believe the collective power of data on our platform can be transformed into deep insights and innovative products and services to create new opportunities for small businesses and their advisors around the world.
There is power in data, but it needs to be used responsibly to maximize that power. To find out how much our customers know and understand about the opportunities and challenges associated with using data responsibly, in April 2021, we surveyed 2,620 small business owners around the world.
We asked them for their points of view on:
- sharing their data with third-party technology providers
- their concerns about data security, privacy and how their data is used
- the potential benefits of sharing their data
The results are helping us develop our thought leadership and education program to empower small business owners and their advisors to understand the opportunities and challenges related to data use, and the benefits to be gained by sharing their data.
Many small business owners are not sharing their data, limiting potential opportunities
To set a baseline, we asked respondents about their propensity for sharing data with their tech providers. We found that, globally, a majority (54%) share no data, suggesting they may be missing out on the potential benefits of data sharing. This figure ranged from a high of 59% in the US to a low of 31% in Hong Kong. Of the respondents who do share their data, 57% of them share it with just a few tech providers, again implying a reluctance to share broadly or a lack of opportunity that may be holding them back from the advantages to be gained from data sharing.
There is a significant need for education on responsible data use
Why do so many small business owners and their advisors not share their data? One reason may be their lack of knowledge about how tech companies use their data. When we asked them how well they understand what tech providers do with their data beyond delivering services or products, only 17% understand completely, while 27% understand somewhat. Those in Hong Kong have the greatest knowledge, with 60% answering completely or somewhat, compared to a low of 39% in Australia. Across the globe, 55% either understand a little, don’t understand at all or are not sure how much they understand.
Another explanation as to why more small business owners don’t share their data is because many of them don’t see anything to gain by doing so. When we asked respondents to identify the benefits, if any, of sharing data with tech providers, the most popular answer (36%) was ‘none’. In the US, 46% of small business owners and advisors answered this way, as did 44% of those in the UK. On the other hand, in Hong Kong, 84% of respondents see at least some advantage. In Singapore, 79% said the same. Again, this shows the need for better education as to how data sharing could benefit small businesses and their advisors.
Top benefits of data sharing include better product development and business insights
The four most common benefits of data sharing respondents say they receive are: improved technology for their use or development of new products (24%); stronger insights about what businesses like theirs need to thrive (24%); better understanding of their customers (23%); and better understanding of how their business operates (23%).
On a regional basis, the most popular benefits cited by respondents include:
- 39% of those in Hong Kong gain a better understanding of their customers, and 31% get a better understanding of how their business operates
- 37% of those in Singapore gain a better understanding of how their business operates, and 32% get both better information about the challenges faced by businesses like theirs and stronger insights about what businesses like theirs need to thrive
- 31% of those in New Zealand gain a better understanding of how their business operates, and 30% get stronger insights about what businesses like theirs need to thrive
Some small business owners are anxious about how their data will be used
Our research indicates that additional factors preventing small business owners and advisors from sharing their data more readily are their worries about how it will be managed by a third party. When we asked respondents to share their concerns, nearly three-quarters expressed at least one anxiety. Their most common fears include their data being sold or shared without their permission; their data being used in a way that makes them feel uncomfortable; their data being stolen; or their data being used to sell them more services or products.
This is interesting given the fact that 65% of respondents say their tech providers do all they can to keep their business’ data secure. This suggests that small business owners may not have full knowledge of how their tech providers manage their data, whether their tech providers have guidelines on handling data responsibly, as well as their tech providers’ privacy and security protocols.
However, our survey reveals that their perception of issues may not match reality. When we asked how many respondents have experienced these problems, very few admitted they have. Overall, less than 10% of them reported any issue, ranging from their data being used in a way they did not approve of to data being stolen. This finding indicates small business owners need a better understanding of responsible data use and how tech providers manage their data. Sharing their data can bring many benefits, and given the relatively few owners who have experienced issues, it can be highly advantageous, and safe, to share their data with tech providers who are committed to responsible data use.
Need for greater understanding of responsible data use terms and conditions
We also set out to discover if small business owners and their advisors are doing what they can to ensure their data is being used responsibly and managed securely. Here we found some potential areas for improvement. When a business shares its data with a third party, that process is explained in the tech provider’s terms and conditions (Ts & Cs). When we asked how many respondents always read the Ts & Cs, only 28% said they do. This figure varies from a high of 32% in the US to a low of 20% in Hong Kong. Moreover, more than one-third (34%) rarely or never read them.
Adding to this potential roadblock, 60% of small business owners have trouble understanding some or all of the Ts & Cs they encounter. This could stem from a lack of technical knowledge or the need for tech providers to make Ts & Cs more digestible.
In general, our findings show a clear need for support when it comes to helping small business owners and their advisors learn more about responsible data use. When we asked them how well-educated they consider themselves when it comes to six aspects of their business’ data use and protection, less than half considered themselves experts or knew more than the basics. Only 39% are up to speed on how third parties access their data, and just 45% are well informed on Ts & Cs and for what purposes third parties use their data.
Survey details: Market research firm Perceptive surveyed the small businesses as a part of Xero’s existing Brand Vibrancy survey in AU, NZ, UK, US, CA, SG and HK. In April 21, Perceptive spoke to 2,620 small businesses, broken down by country as: AU (n=503), NZ (n=417), UK (n=591), US (n=491), CA (n=340), HK (n=97) and SG (n=181). Survey respondents are all small business decision makers with less than 50 employees; the data is weighted to represent a true market split of sole traders and employing businesses.