SBSI Wave-5
Figure 7
*Rated 8 to 10 on a 0 to 10 scale, where 10 = completely successful.
The second biggest indicator of small business success, Marketing and Innovation, dropped significantly over the last year because of declines on all attributes. The biggest decline was in the confidence of small businesses to position their companies as having the same capabilities as big organizations in their industry. A year ago, almost half – 47 percent – of owners believed they were successful in going up against big business, but now only 33 percent are so confident. As many large corporations are reporting record earnings, owners of small businesses are at a low point in vying for customers from big competitors. Other Marketing and Innovation areas also declined in the past year, including identifying new prospective customers (which dropped significantly from 47 percent to 39 percent in a year), and less steep (and not statistically significant) drops in finding efficient ways to advertise and converting marketing leads into buyers. There is one bit of good news: in June of last year, there had been a large drop in finding new ideas to increase revenue, but this area recovered by January 2011. Though innovation is still a weakness for small business, the situation is improving. The main challenges are now in communicating the strengths of small businesses, getting leads and converting them into sales.
Success in the Workforce area slipped this wave, as small businesses feel less successful in training and developing employees (only 58 percent are highly successful compared to 67 percent a year ago), and maximizing the productivity of staff (57 percent are highly successful, compared to 66 percent a year ago). Small businesses performance in rewarding and motivating employees remains at a mediocre level (59 percent are highly successful). A particularly weak Workforce area for small businesses is in the ability to compete with other companies to get good employees (46 percent are successful).2 This weakness has been observed in the past, but will increase in relevance as small businesses seek to hire over 3 million new staff in the coming year (discussed later).
Customer Service is an area where small businesses continue to shine. They know how to keep their customers happy and win repeat business from them, which provides an important revenue base for small businesses in these tough times. Success in this area declined slightly since a year ago, although the drops are not statistically significant. Computer Technology is an area of frustration for small businesses, but the majority of small businesses (57 percent) are successful in making technology work for them. Small businesses do not have trouble with Compliance, as nine-in-ten small businesses are highly successful in complying with laws and regulations pertaining to their business.
Internet Business Solutions
The Small Business Success Survey measures the importance and adoption of Internet business solutions (e.g., websites) that help businesses market their brand, service their customers and run more efficiently and securely. Internet business solutions are becoming more important to small businesses, helping to attract new business in an improving economy. Now, 42 percent consider internet business solutions to be highly important, compared to only 33 percent in June 2010 (see Figure 8).
Figure 8
In the last survey wave in June 2010, usage of individual Internet business solutions had dropped to a low point, a trend we believe was driven by efforts to cut expenses in the throws of the recession. Even the burgeoning social media area had stabilized after almost doubling in 2009. A major turnaround occurred in the second half of 2010, so that adoption rates for various solutions are at a new high (see Figure 9 on next page). The biggest growth has been in company websites, which are now deployed by 56 percent of small businesses compared to just 46 percent a year ago in December 2009. Based on their future plans, two out three (66 percent) small businesses will have a website by 2013.
Another area of great interest is the adoption of social media by creating a page or presence on a site like Facebook or LinkedIn. Adoption is now at a new high – 31 percent – up from 24 percent a year ago and 12 percent two years ago. Based on current plans, almost half (46 percent) of small businesses will have a social media presence in two years. (A later section talks more about the use of social media).
Another internet business solution that has grown substantially in the past year is the use of a Search Engine Optimization plan, which grew from 19 percent a year ago to 27 percent. Online payment capabilities and shared computer networks also experienced slight growth.
Google+
