Four Behavioural Hacks to Help Small Businesses Make More Effective Technology Choices

Written by Rachael Powell at Xero.

Adopting new technology doesn’t always come easy to small businesses. But what is it that really holds small business leaders back from investing in technologies – even when the benefits of doing so are clear?

Xero recently conducted behavioural science research to answer that very question, studying responses from more than 4200 small business decision-makers in six countries. One key takeaway from the One Step report: it’s not about education or information. In most cases, small businesses delay adopting new technology because they struggle with less-than-productive mindsets about risk, reward, and change – like the notion that “if it ain’t broke, why fix it”, or that the risks of change aren’t worth it, or that comparing all the choices out there is just too hard.

If those anxieties resonate with you as a small business owner or sole trader, you’re not alone. Nearly 1 in 3 small businesses in the study identified as “Delayers” who would put off or hold back from adopting new technology because of these behavioural barriers – substantially more than the 1 in 5 who would actively invest in the latest technology solutions.

On average, those “Adopters” enjoyed 120% more revenue and 106% higher productivity than their Delayer counterparts and were more likely to wake up feeling excited about work or proud of what their business does. In other words, overcoming the behavioural barriers to adopting new technology is worth doing. The obvious question is: how?

We know that if you’re a small business decision-maker, simply doing more research or investigating more options probably won’t work. In fact, the study found that small business owners tended to freeze up and avoid decisions when confronted with too many technology options or too much complexity. Instead, you’ll want to focus on small step-changes that help you to minimise biases and make more rational choices about technology. Here are four that were identified in the study:


1. Enter the (decision) matrix.

When making decisions, we tend to overstate the benefits of what we’re familiar with or currently using, while perceiving the risks of something new as being greater than they might really be. A decision matrix can help even things out. It’s a simple tool which can help small business owners visualise the pros and cons of different technology options in a consistent manner, by “scoring” each option against criteria that you’ve determined as important to your business. Check out this example and template here ( and put it into practice if you suspect you tend to favour the status quo more than you should.



2. Go time-hopping with a “pre-mortem”.

Along similar lines to the decision matrix, the pre-mortem challenges us to rethink how safe our current situations are compared to adopting something new. To conduct your pre-mortem, start by imagining a scenario where current systems or solutions have failed, then write down all the reasons that this might have happened. Next, do the same for a new technology solution. Comparing the two can help clarify the real difference in risks between adopting new technology or staying with what you’re accustomed to, rather than relying on gut feel or intuition that skew towards the familiar.


3. Run a rational cost-benefit analysis.

One of the biggest barriers to tech adoption in small businesses is ambiguity and uncertainty. When considering a new technology, it can prove challenging to weigh up the costs and benefits. To do so more reliably, list down as many benefits of the technology option as you can – anything from greater profit to more time to spend with family – then assign a time or monetary value to each. Then do the same “valuation” by listing down all the costs you might incur when upgrading.  The process helps create a “like for like” comparison that’ll help you shift from focusing on possible costs to a more holistic view of potential upside.


4. Learn from others.

The study found that small business decision-makers – particularly sole traders – tended to struggle when they couldn’t see the direct relevance of a technology or solution to their business situation. If that’s how you find yourself feeling, consider setting aside a bit of time to learn about how businesses like yours are making use of technology. Seek out stories of how Adopters have successfully used technology, it might help you not only get more accustomed to the idea of adopting new technology yourself, but also give you valuable guidance on how to approach the process. After all, the people in your network can have a huge impact on how you think.

The more you understand the barriers that might cause you to hesitate from adopting new technology, the easier it becomes to overcome them.