2011 Outlook For Small Businesses: A Mixed Bag

February 28, 2011

12:09 pm

Network Solutions just shared their State of Small Business Report with the University of Maryland Robert H Smith School of Business and it’s not pretty. But it is optimistic. Here’s why. From the first paragraph of the report:

The competitive health of America’s small businesses is as low as it has been since the SmallBusiness Success Survey began tracking at the onset of the recession. There continues to be a struggle to provide capital and find new customers, while there is an unprecedented lack of confidence in competing with big business. Yet, small businesses are starting to grow and return to the black. After reaching a low point in the summer, technology investment is on the rise and social media adoption continues to grow. Despite poor competitive health now, owners are becoming increasingly optimistic about the economy and their future business success. Over aquarter plan to add staff in 2011, and if they carry out their plans, will create 3.8 million jobs.

Unfortunately, more businesses than ever are now classified as “failing” in competitive health – the share of failing small businesses is now 28%, compared to 19% twoyears ago just at the onset of the recession. Despite the low grade, businesses are more optimistic than ever. For the first time in two years, more small business owners think the economic climate is improving rather than worsening (35 percent compared to 19 percent) probably because in 2010, 38 percent experienced a gain in sales over the previous year, compared to only 15 percent who experienced a decline; which is way up as more businesses experienced a decline rather than a gain in 2009.

Small Business Report Card

Small Business Success Report Card

Here are a few more key points from the report:

  • Compared to a year ago, small businesses face greater problems with training and developing staff, and maximizing staff productivity.
  • Only a third (33 percent) of small businesses feel they are successful competing with the big companies, compared to almost half (47 percent) a year ago.
  • The perceived importance of internet business solutions (IBS) such as websites grew in the past six months; 42 percent consider IBS’ highly important to their success, compared to only 33 percent back in June.
  • Social media is now used by almost a third of small businesses (31 percent), up from 24 percent a year ago and 12 percent two years ago.
  • Over a quarter (27 percent) of small businesses have a Search Engine Optimization (SEO) plan, up from 19 percent a year ago.
  • There is almost universal awareness among small business owners of Facebook and Twitter, while half are aware of LinkedIn.
  • The most commonly used social media sites are Facebook (used by 27 percent of all small businesses) and LinkedIn (18 percent). The growth in social media is not cutting into investments in company websites, and is actually contributing to their expansion;
  • 62 percent of social media users feel their use of this medium has no effect on their web investments, while 27 percent believe it will result in greater spending (only 9 percent would spend less or forgo their website).
  • Most owners consider mobile marketing to be “ahead of its time” (24 percent) for small business or “cutting edge” (36 percent). Only 15 percent of small business owners believe that mobile marketing would be “extremely” or “very valuable” to their enterprise, and another 20 percent feel it would be “somewhat” valuable.

Overall the report is a mixed bag of news, however, the numbers show that the small business sector is expected to add 3.78 million jobs to the U.S. economy in the next 12 months. You can read more details in the 36 page report here.

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Jen Consalvo is the Cofounder and COO of Tech.Co. She previously worked in product development for almost 13 years at AOL for audiences of millions. Follow her on Twitter at: @noreaster.

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