It is the best of times, it is the worst of times. It is the age of wisdom, it is the age of foolishness. It is the epoch of belief, it is the epoch of incredulity. . . etc, etc, etc. Charles Dickens must have been channeling Nostradamus as he wrote A Tale of Two Cities 150 years ago, because it sounds like life in 2009.
However, even in the face of a seemingly never-ending supply of economic bad news, small business people are still a pretty optimistic bunch, according to a recent study of 1,000 small business owners performed by Network Solutions and the University of Maryland’s Robert H. Smith School of Business.
According to the study, 69% of the respondents said they turned a profit in 2008, with a slight majority feeling the economy will either stay the same or possibly improve in 2009. That’s pretty optimistic compared to the sentiment of the general population. They’re even more optimistic about the future, with 70% of them expecting to still be in business five years from now – 66% believe they’ll be even bigger by then. Now those are truly great expectations, considering the vast majority of small businesses never see year five.
The study launched the Small Business Success Index (SBSI), which will be a barometer of the overall health of the nation’s small business sector. The index tracks 28 indicators, broken into six main dimensions, to come up with an overall score on a scale of 0 to 100. Of the six main dimensions, which include computer technology, customer service, compliance and workforce, the two most important areas capital access and marketing/innovation.
The inaugural SBSI score came in at 75, representing an overall grade of C. And while posting high marks in customer service and compliance, in the two most important areas of capital access and marketing/innovation, the grades were 68 (D+) and C-(71) respectively.
While access to capital is a tougher nut to crack, a deeper look into marketing and innovation uncovers serious problems with lead conversion, and efficient advertising and promotion skills – each of which received scores in the high 60s. And with scores like these, in the second most important area to their business, it’s difficult to see where the expectation of being bigger and better in the future is coming from.
What may be able to pump up those low marketing/innovation scores a strong presence on social networks. According to a recent Nielsen Company study, two-thirds of the world’s Internet population visited a social networking site or blogging site – what they refer to as Member Communities. And these communities have overtaken email as the fourth most popular online activity. A prime example of this is Facebook, where people spent 20.5 billion minutes in 2008 – a staggering 566% increase from 3.1 billion minutes in 2007.
Aside from the Facebook’s meteoric rise, on average the amount of time spent on Member Communities rose at a very high rate of 65%, far surpassing the 18% growth of overall time spent online.
And according to the Network Solutions study, small businesses do plan on increasing their social media presence over the next two years considerably, in order to improve their marketing effectiveness. But even with an expected 167% increase in the number of small business owners planning on using social media over the next two years, it will still only total roughly 26% of all small businesses surveyed. That number will have to be higher than that to make sure your business has a chance to exist and be bigger in five years.
The Nielsen report points to social networks creating a potentially transformational change in consumer behavior. The kind of change that may enable small businesses who embrace social media and networks to find the kind of success they hope for, but might not attain by practicing business as usual. And while it might seem like doing business as usual is less risky than exploring where new technologies may take you, what could be more risky than standing pat in this environment?
There’s so much good information in both studies that I can only scratch the surface here. But the information in these two reports is incredible. So do yourself a favor and go through the Network Solutions study to get a great look at where we are today with respect to the Small Business Success Index. Then read the Nielsen report to understand the potential impact social media can have on your efforts to promote your business, and engage potential customers in today’s world. This is the kind of information that just may help small businesses stick around for awhile.
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About the Author: Brent Leary is a Partner of CRM Essentials. Brent also hosts Technology For Business $ake, a radio show in the Atlanta, Georgia, USA area about using technology in business and he is co-author of Barack 2.0: Social Media Lessons for Small Business.
