As is often said, the heart and soul of our economy is small business. The vast majority of new jobs created over the years have been generated by this sector. And while many of the headlines focus on the exploits of the big guys, it’s the small business community who keeps us afloat. According to research firm AMI Partners, small and mid-size businesses (SMBs) account for 90% of the world’s workforce, and more than half of its gross domestic product.
But as we all know small business is suffering mightily, as the economy has taken its toll on everyone and everything. Eventually the economy will get back on track, with small business leading the way. According to a study released by Microsoft last month, tech-savvy small businesses will be an important group acting as a catalyst for the overall economy. And while cost-cutting in the face of economic downturn is essential to survival, many small businesses are turning to IT to lower costs.
According to the study of more than 600 Microsoft Small Business Specialists (MSBS), general economic conditions and declining revenues are actually driving interest in IT at the small business level. And while 45% of those surveyed expect their SMB customers to spend less on IT in 2009, 30% expect spending to hold steady, with 25% expected actually increasing their IT spending.
Even as some companies decrease the amount they expect to spend on IT this year, their dependence on technology may actually be growing. The study found 40% of SMBs expect the technology they do implement to reduce overall costs while increasing employee productivity and efficiency. In fact the survey expects a 20% increase this year in spending on software as a service (SaaS) products.Â
Also, technology that enables workers to work remotely will grow in importance as it will allow people to work from anywhere, decreasing costs on both the employer and employee. And with technology being used more strategically, SMBs will be more efficient in terms of bringing on new employees at the appropriate time to handle tasks core to the growth of the business.
At the moment the focus on cost-cutting is understandable. But the other main challenge facing many SMBs is the need to efficiently acquire new customers, while extending relationships with current customers. Without a consistent flow of new customers, coupled with stable of loyal customers, a business will not survive. And SMBs are looking to expand their pool of qualified leads while simultaneously bringing down the cost per lead. Finding efficiencies in the sales process also serves a dual purpose of increasing conversion rates while decreasing the cost per sale.
Online collaboration tools allow SMBs to reach a wider pool of prospects in a more cost-effective manner. Being able to host webinars and other online events allow smaller businesses to engage audiences outside of their geographic area, but still looking for the products and services they provide. And using online collaboration tools can decrease the costs involved with customer acquisition. It can help strengthen existing relationships with current customers, while lessening the possibility of competition making inroads with loyal customers.
As small businesses look for ways to survive in this economy, it will be important to consider the impact technology can have on their fight. Cost reduction is the pressing need, but plenty of good paying customers are what keep the lights on. And with the proper use of current technology, you can drive down costs while increasing opportunities to create and nurture profitable business relationships. That’s the kind of stimulus we all need.
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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.