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Small Business Success Index 4

Index Score*   Grade
73 marginal
Capital Access 67
Marketing & Innovation 65
Workforce 76
Customer Service 88
Computer Technology 73
Compliance 92
*Index score is calculated on a 1-100 scale.
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Small Business Success Index Articles


Now is the Right Times to Spend on Online Technology according to SBSI Report

September 30th, 2010 :: Thursday Bram

Small business owners are routinely confronted with a difficult decision: when is the right time to spend money on the business. The question becomes significantly more complex when you’re considering spending that money on online technology. It’s evolving quickly — what is cutting-edge for your industry today may be obsolete next week. Despite these concerns, however, making the investment in the right tools for your company is necessary.

In the survey that resulted in the most recent Small Business Success Index, small business owners reported lower levels of spending on online technology. While there’s still plenty of spending on social media — adoption rates held steady at 24 percent — adoption of other technologies dropped. That includes technologies ranging from websites to online advertising.

Getting Ahead of the Game

If your key competitors are small businesses, this information means that there is an opportunity to get ahead of them with some carefully considered investments into your business’ online technology. The best opportunities depend on your industry: if you’re in a particularly tech-heavy field, you may need to be moving towards the latest and greatest social media opportunities. A particularly heavy investment may not be so important if you’re in an industry where your competition is slow to adopt new technology. Many individual professionals, for instance, have been slower to roll out new websites and other online marketing efforts, creating a gap where you can move forward if you’re willing to put some money into the online technologies that will help you reach out to new customers or even manage your business more effectively.

The difficult consideration is choosing where to invest your time and money. If you’re planning to handle each step internally, it can take time for you or one of your employees to get up to speed on the fast moving developments among website tools and the like. Simply for the sake of efficiency, it may be worth focusing your initial spending on tools or consultants that can bring you up to speed quickly. It’s perfectly possible for a small business to build its own online technology, but it is often at the cost of taking away from your core competencies.

Focus Energy on the Big Wins

When it comes to online technology, there will always be low-hanging fruit: something as simple as building a basic website can transform your business if you haven’t already done so. Similarly, there are ways to get the most bang for your buck with social media or SEO. By going after the big wins first, you’ll get significant benefits. The opposite approach — doing each step perfectly and optimizing it as much as possible before moving on — will get you the maximum benefit, but only over a longer time frame. By looking for the biggest changes you can make, you can start reaping the benefits fast enough that you’ll be able to easily spend time and money on the smaller tweaks later on.

That approach can extend beyond marketing technologies. There are many online technologies that can help with other facets of your business, although the marketing tools often offer the biggest upfront wins. New inventory systems, bookkeeping tools and other technologies are also worth investigating.

Image by Flickr user Michael Surran

Working Abroad: What It Takes and When It Makes Sense

September 28th, 2010 :: Thursday Bram

Interest in telecommuting is growing — and not just for employees. Many business owners are exploring opportunities to make their companies virtual, so that they can travel or move easily. The specific form such a change can take varies, but for small business owners with goals simply beyond growing a business, heading abroad can certainly make sense. Thinking globally can have benefits beyond the personal for a small business owner, as well. Only 7 percent of small businesses do most of their business globally, according to the Small Business Success Index, but there are huge opportunities.

Making the Choice to Go Virtual

You may have worked on the assumption that you have to go into the office every day for years, but the real truth is that most office-based businesses can easily be made virtual. Even many stores can be converted to online-only operations with surprisingly few problems. The only businesses that don’t offer the possibility of going online are those that require a physical presence — a mechanic can’t usually convince a customer to ship a car overseas to be repaired and a doctor probably needs to see his patients during the diagnosis process. It’s worth noting, though, that the administrative processes for such businesses could probably be virtual.

But there’s more to the decision to go virtual than just the option to do so. Not everyone is comfortable working from wherever they happen to be: some people need the environment of an office. That means that, before you decide to take your office entirely online, it’s important to actually test how you and your employees work without the structure of an office environment. Similarly, you’ll need to test tools to see what you’ll need to be able to manage each part of your business.

What Your Business Will Need

A virtual business still requires a mailing address and some other physical aspects of a company. However, those needs don’t have to tie down the company. They can amount to something as simple as a post office box that someone associated with the company checks once a week. There are even companies that do little more than accept mail and scan it for the actual recipients. You’ll also need a computer and an internet connection no matter where you are, which can often amount to a laptop and some sort of wireless access point. Beyond those basic necessities, you’ll need to look at the specifics of your business and your industry.

Many of the software tools needed to operate an office now have web-based counterparts, allowing you and a distributed team to stay up to date with each other from around the world (provided, of course, that everyone involved has a decent internet connection). That includes project management, bookkeeping and even industry-specific tools. It’s a matter of exploring what is available.

Image by Flickr user Tom Godber

Turning Around the Small Business Workforce

September 23rd, 2010 :: Thursday Bram

The past few years have been tough on small business owners working to build the workforces necessary to growing a company. Rising costs of employment, paired with a down economy, have simply reduced the resources most business owners have available to invest in a workforce. In the most recent Small Business Success Index, many small business owners pointed to less success in training and developing employees — 58 percent consider themselves highly successful, down from 65 percent a year ago.

Creating the right team is crucial to a small business and has long made small businesses competitive as employers: employees at smaller companies tend to get more opportunities for development, more responsibilities and even more opportunities to increase their own income. But many small business owners report struggling with workforce issues right now.

Making the Most of an Improving Economy

Most small businesses are seeing their financial situation improving. That means an end to at least some cost-saving measures and perhaps an increase in hiring. It’s time to take a look at how you can improve your existing team and where you need to consider hiring more help. Your employees are about to have a lot more options in terms of employers and you’ve got to make sure that they have reasons to stick with you.

Just as one of the best strategies to manage your workforce during economic downturns is to talk to your employees and make sure that they’re kept up to date on what’s going on, it’s good practice to talk to them during good times as well. If you’re thinking about how you can improve things for your team — as well as how to develop them into a better workforce — check in with them and see if there’s any requests on the table. You may be surprised: an employee may be more interested in increased responsibilities or help furthering his education than a bigger benefits package. There are plenty of ways to help both you and your employees move forward and they may have some suggestions in that direction.

Avoiding Workforce Problems

If you feel that your business may be one of those that isn’t having as much success as in years past, it may be particularly crucial to look for solutions. For the past few years, most employees have been reluctant to try to leave their current employers — after all, there was no guarantee that they could easily find a new job. There are still elements of a jobless recovery right now, but the overall economic situation is headed in a direction where many employees will feel better able to replace an unsatisfactory job.

As a small business owner, it is necessary to make sure that trained, valuable employees have little incentive to start job hunting. The shape your efforts will take depend on your industry, as well as the needs and expectations of your employees.

Image by Flickr user Bill Jacobus

Turning to a Global Workforce Creates More Small Business Opportunities

September 21st, 2010 :: Thursday Bram

At the end of the day, your workforce decides whether your business succeeds. You need good people at a price that leaves room for a return in your business. But the cost of hiring keeps going up, making it difficult to bring in the people that will really make a difference as your business grows. One option may be to consider a more global workforce.

In every business, there are plenty of tasks that don’t need to be done in your office. The number of tasks that can be handled off site keeps growing, as well: if you’ve got a few key pieces of technology, anything from bookkeeping to marketing can be done away from your office. That opens up the possibility of working with a remote team. Just who is on your team can also vary: it’s no almost as easy to hire a virtual worker in the Philippines or in India as it is to hire an employee who lives down the street from you.

Changing the Cost Question

There is one key factor when it comes to working with a global workforce, rather than a local one: cost. The monthly income for most jobs in the Philippines is under $500 (U.S. dollars) — an engineer might expect to earn a little over $400 while a receptionist would be closer to $150. There are other reasons that your overall costs would be less when working with a distributed team: you wouldn’t need to pay for office space for those team members located outside of your geographic area. It may take some investment in terms of hardware or software to make sure that your team can work well, but internet access and even computer ownership is becoming fairly common in most countries (at least in the bigger cities). A global workforce presents an opportunity for most businesses.

Considering Your Own Business

It can take some careful consideration to determine just what jobs in your company don’t need to be done in the office. There are also personal considerations: you may simply have a preference to have your bookkeeping done locally or something similar (although you might consider the opportunities available by choosing a bookkeeper who is local but also doesn’t come into the office. You may need to check out what tools and technologies are available for your industry — many fields now have specialized tools to make telecommuting and distributed workforces easier to manage.

In the most recent Small Business Success Index, many business owners reported less successes in training and developing employees, although there were moderate successes in improving employee productivity and rewarding employees. Turning to a global workforce can create more opportunities for small businesses to expand workforces and create better working environments, if only because of the relative costs involved in looking for new employees outside of the country.

SBSI: Marketing Is Increasingly Difficult for Small Businesses

September 17th, 2010 :: Monika Jansen

The fourth wave of the Small Business Success Index (SBSI) was just published, so naturally I went right to the marketing section, eager to see how we small business owners are doing in marketing and innovation.  The SBSI measures competitiveness, which they define as “the level of success a small business achieves in conducting the organizational activities critical to its short and long term viability.”  If the SBSI score on marketing is any indication, we’re done for.

Though it scores 2nd in importance, marketing and innovation got a D grade (down from a C- last winter).   That represents a huge drop, and it really sucks.  According to the SBSI, small businesses are struggling with marketing and innovation, becausethey’re running out of ideas on how to creatively market their businesses.

I kid you not!  Here’s a direct quote from the SBSI:

Businesses are having trouble marketing and positioning themselves in a highly competitive market, but are having even more difficulty in coming up with new ideas to grow their businesses.

I’m sorry, but that is the most pitiful thing I’ve ever read.  My business has grown considerably in the last 6 months, so I guess what I’m doing has worked (mostly networking and marketing via this blog).  I think to be successful at marketing, you need to continually read marketing-focused blogs, newsletters, and articles and find out what other people are doing.  Their creative ideas can definitely provide a jumpstart to get your creative juices flowing.  (Yes, there is a lot of info out there, but you don’t have to read it all, just some of it.)

Off the top of my head, here are a few things a small business can do to market their company:

  • Network locally and at tradeshows and conferences.
  • Hold workshops and seminars through local incubators, chambers of commerce, and networking groups.
  • Start a business blog and/or newsletter that are published regularly and are short, funny, chock full of personality, and informative (about both your company and your industry).
  • Keep your website updated and make sure it’s search engine optimized.
  • Videos and podcasts.
  • Hold a contest.

How you have fared with marketing and innovation over the past 6 months?  Would you agree it’s gotten more difficult?  Are you running out of ideas, too?

Small Businesses Focusing on Increasing Training and Development of Employees

September 16th, 2010 :: Thursday Bram

In the most recent Small Business Success Index, small business owners responded to questions about their workforce. They noted that concerns about workforce were less important than those about capital access or marketing and innovation, but are still ranked above those on customer service, computer technology or compliance. The workforce index score was 76 — a ‘C’ grade — which remains fairly constant from the last Small Business Success Index.

Slipping Workforce Scores

While the overall Workforce score did not dramatically change, it has slipped slightly, which could create concerns for most small businesses. Specifically, concerns seem to focus on training and developing employees: a year ago, the Small Business Success Index reported 65 percent of small businesses were successful in this area. In the most recent set of results, however, only 58 percent reach the same level.

Not all factors that the Small Business Success Index measures for creating an overall workforce score showed slips, however. Small business owners reported better results in rewarding employees and maximizing the productivity of their employees. Overall, however, the changing economic situation makes it necessary for small businesses to improve workforce factors in the near future — it may not be the highest priority in a business today, but it’s going to be increasingly important.

It is worth noting that 33 percent of small businesses have just one employee — also known as the owner. On average, a small business has two employees, typically still counting the owner. It may also be counting a partner or co-owner. That information does mean that workforce concerns look a little different for roughly a third of small businesses than all the rest: training, development and maximizing efficiency are at least somewhat higher priorities when the owner of a small business is the only person on the job. Rewarding employees and employee morale looks very different in such situations.

Spouse Participation

This Small Business Success Index brought interesting considerations about spouse participation to light. While every small business owner knows that, when you start a new business, having the support of your spouse or significant other makes your life a lot easier. But the numbers show that the participation of a spouse or significant other doesn’t have a discernible impact at first — whether or not your significant other is involved, you have similar odds of success.

But the long-term impact is much more dramatic. If your significant other takes on a full-time role in the business, it can lead to success. Businesses with spousal participation rank as more successful on the Small Business Success Index — a 76. In comparison, businesses where spouses play no role rank a score of 73, while businesses with spouses as silent partners rank a score of 72. Those numbers can have interesting ramifications for your workforce if your significant other is interested in getting involved with the business.

Image by Flickr user iyasser

Small Businesses Plan to Increase Technology Investments in 2011 according to SBSI Report

September 14th, 2010 :: Thursday Bram

In the most recent version of the Small Business Success Index, scores for computer technology slipped to an index score of 73 — a ‘C-minus’ grade. The state of the economy may contribute to that drop, making it harder for small businesses to invest in the technology they need to grow. However, small businesses are, overall, expecting better returns in 2010 than the past year and a half, which may offer opportunities to improve technology in the near future.

Technology Frustrations

There seems to a certain sense of growing frustration with technology. Fewer small businesses reported this year that they are making technology work effectively for them (53 percent, down from 60 percent. With the exception of social media tools, overall use of online business technologies have dropped. There is little focus on adding technology that will make a small business operate more efficiently.

Only four percent of small businesses report that they have (or plan to add in the next two years) a shared network that allows employees to work together, collaborate on documents and manage projects. Only ten percent have (or plan to add in the next two years) an e-commerce solution to allow customers to pay for products and services online. It’s very likely that adding this sort of technology to most small businesses would improve the efficiency of the company and save money in the long run, but it simply isn’t a priority.

Online Technology Spending

Certain types of technology spending are in better shape, however. On the last Small Business Success Index, social media spending had leaped; the new version shows that social media spending is holding steady, although it isn’t booming the way it did at the beginning of the year. Most small businesses have not seen huge payoffs from social media, but there’s a certain sense of optimism that it will pay off within the next year. More than half of small business owners expect profits as a result of investing in social media. There’s a trend toward using social media as a tool to stay in touch with existing customers, rather than to find new customers.

Online advertising and search engine optimization are struggling the way the broader sector is. Small businesses planning add websites to their technology mixes are holding up overall online technology numbers — 17 percent of small businesses planned to get a website in the month following the survey, up from 10 percent a year ago. Thirty percent of small business owners who use social media are actually planning to increase the budget they invest in their websites and an additional 60 percent plan to keep their budget consistent (no cuts).

By the middle of 2012, if trends continue, two-thirds of small businesses will have websites. Almost half will advertise in online directories. The big question is what will those online technologies be used for: customer service? lead generation? reputation-building?

Image by Flickr user Leif K-Brooks

Tweetchat on “The State of U.S. Small Business” Wednesday, Sept 15th, from 1-2:30 pm EST

September 9th, 2010 :: Steven Fisher

Are you a small business owner feeling burned out and struggling to find new ideas to grow your business? Come join us for a Network Solutions hosted tweet chat (#NetSol) to understand the current state of the U.S. Small Business, key challenges facing them in terms of marketing and innovation, access to capital and, more importantly, leave with some simple tips on how to overcome those challenges.

Steve King

Our guest tweeter, Steve King, eminent small business researcher and President of Emergent Research, a small business consulting company will unveil the top ten findings from the recent Network Solutions’ Small Business Success Index, Wave-4 and offer some simple steps to overcome roadblocks that stop you from being innovative. Join us for the Network Solutions tweet chat to understand:

  • The current status of U.S. Small Business across six key dimensions (capital access, marketing & innovation, workforce, customer service, computer technology and compliance).
  • Top ten findings from Network Solutions’ Small Business Success Index that affect your future growth.
  • What technology investments are deemed a priority for small businesses in the next two years?
  • How social media usage among small businesses has changed in the last year?
  • How to continue to be the innovation engine despite the current economic conditions?

Event Details:

When: Wednesday September 15th 1-2:30pm EST

Where: http://tweetchat.com/room/netsol

Register:  http://netsol.eventbrite.com/

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Small Business Use of Social Media up 200% since 2009 says, Small Biz Report.

May 7th, 2010 :: Steven Fisher

Social media adoption by small businesses has doubled from 12 percent to 24 percent in the last year was one of the big take aways from the most recent edition of the Small Business Success Index™ (SBSI). This third wave of the report, sponsored by Network Solutions® and the Center for Excellence in Service at the University of Maryland’s Smith School of Business reports that small business are mainly using social media to identify and attract new customers.

Social Media is a Call to Action and not just a Buzzword

If you use social media in any way for your small business you are probably saying “heck yeah” to that confirmation which you have known about for a while. Many small businesses however have been starting to figure this out and in 2009 the buzzword was also a call to action.

The report quotes Connie Steele, Director at Network Solutions, “Tough market conditions mandate small businesses to think and act creatively to sustain themselves”. “Social media can be the best friend for small business owners who constantly seek new ways to attract new customers and retain the ones they have at a relatively low cost.”

Also from the report, the SBSI found that nearly one out of five small business owners are actively using social media in their business. Small businesses are increasingly investing in social media applications, including blogs, Facebook® and LinkedIn® profiles. The biggest expectation small business owners have from social media is expanding external marketing and engagement, including identifying and attracting new customers, building brand awareness and staying engaged with customers.  Sixty-one percent of the respondents indicated that they use social media to identify and attract new customers. Listen to a podcast on how small businesses are leveraging social media for customer engagement at http://bit.ly/JayEhret

Really Cool Statistics

Small business owners use social media to attract new customers:

  • 75% surveyed have a company page on a social networking site
  • 61% use social media for identifying and attracting new customers
  • 57% have built a network through a site like LinkedIn
  • 45% expect social media to be profitable in the next twelve months

Small business owners still have concerns with social media:

  • 50% of small business social media users say it takes more time than expected
  • 17% express that social media gives people a chance to criticize their business on the Internet
  • Only 6% feel that social media use has hurt the image of the business more than helped it

“Social media levels the playing field for small businesses by helping them deliver customer service,” says Janet Wagner, director of the Center for Excellence in Service at the University of Maryland’s Robert H. Smith School of Business. “Time spent on Twitter®, Facebook® and blogs is an investment in making it easier for small businesses to compete.”

People Are Getting More Creative

The main theme of this edition of the report is “Creativity as a strategy for success”. From the report, the executive summary mentions how “Small businesses are highly successful in getting referrals from existing customers, but struggle to be creative and differentiate themselves.” The major ways that small businesses differentiate themselves from competitors are:

  • Superior customer service (78 percent)
  • Higher quality products and services (76 percent)
  • Creative ideas to address customers’ needs (65 percent)
  • Lower prices (44 percent)

Among these four areas of differentiation, superior service and creativity are correlated with competitive success, while quality and low prices make little difference to small business success.   Perhaps everyone claims to have high quality, making it a marginal strategy for differentiation, while cutting prices is not sustainable for small enterprises that lack the economies of scale to keep costs low.

About the SBSI Report and Other Key Findings

In addition to tracking how small business owners use technology, the SBSI Index measures how they are doing in six key areas of business: capital access, marketing and innovation, workforce, customer service, computer technology and compliance.

Other key findings from the December 2009 Small Business Success Index include:

Small businesses experience positive effects from the economic downturn:

  • 72%  have found ways to operate more efficiently (up significantly from 66% in June)
  • 47% have been led to find new products and services that benefit customers
  • 43% have become better teams as hard times force people to work together

Building online presence continues to be key focus for small businesses:

  • Company Web sites are a top technology investment in the next two years, with small businesses either adding new features/functionality to their existing Web sites or building one from scratch.
  • The ability to showcase their products and services online to attract new customers is second in the hierarchy of technology investments small business owners plan to make in the next two years.
  • Social media investments rank third in small business investments to be made in the next two years.

Come On You Know You Are Dying to Read the Rest of It

To download a copy of the Small Business Success Index and also find out how your business scores on the six key dimensions of small business success, visit www.growsmartbusiness.com.

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Marketing, the Small Business Success Index, and You

March 19th, 2010 :: Monika Jansen

Network Solutions and the Center for Excellence in Service at the University of Maryland’s Robert H. Smith School of Business released the findings of their Small Business Success Index survey on February 16.  The index is designed to track the competitive health of the small business sector over time, and the results are always interesting.  Scores in 6 categories are graded; marketing and innovation got a C-.  Let’s see why: 

From celestehodges on Flickr[S]mall businesses perceive themselves at a disadvantage in marketing and innovation.

That statement surprised me, because one of the key findings of the survey was that small business owners have embraced social media: social media usage has increased from 12% to 24% in just 12 months.  Since social media is widely seen as an excellent tool to level the playing field between big, multi-national companies and small, me-myself-and-I businesses, it would seem to me that the small business owners who are using Twitter, Facebook, and LinkedIn (the most popular social media sites) are doing something right with their marketing strategy. 

But then I read this: 

Common marketing methods for reaching potential customers include print advertising (37%), email marketing (24%), social media marketing (19%), telephone sales (18%), direct mail (17%) and broadcast advertising (14%).

I honestly do not understand why so many small businesses still use print and broadcast advertising.  I considered advertising in a local magazine for business women last year.  But then I realized how tiny the chance was that potential customers would not only see my ad but remember it, too.  I’d have to invest a lot of money to run that ad every month. Think about it: what if your potential customers don’t have time to read that newspaper issue, or listen to the radio that week because they’re on vacation, or watch TV because they lost cable during a big snowstorm?   You just spent all that money, and what kind of leads did it generate?  If you’re getting a great ROI using traditional advertising methods, good for you, but if you’re not, time to talk to a marketing strategist, who will save you time and money (in the long run).

Back to social media:

The majority of small business owners who use social media (58%) feel the medium has so far ‘met expectations.’  Another 12% feel it has ‘exceeded expectations’ but twice as many, 26%, feel it has ‘fallen short of expectations.’ 

The fact that 70% of small businesses are finding new customers, engaging with current customers, and generating awareness with social media is encouraging, as it proves that integrating social media into your marketing efforts is worthwhile.   

Half of users, though, said social media has used up more time than expected.  Yes, it does take time, but it is time well-spent.  Being able to so easily connect with people who want, need, and/or use your company’s product or service is an amazing opportunity that was not possible just a few years ago.  Embrace technology, don’t run from it.     

I am active on Facebook (professionally only—I do not use it for my “regular” life), Twitter, and LinkedIn, and I write blog posts for Grow Smart Business.  You need not be active on a handful of sites, though.  Pick one or two and stick with them.  There are lots of guides, white papers, and articles online that contain valuable information on how to use social media effectively.  Spend an hour or two on research, and either put together a new marketing strategy yourself or, like I said above, hire an expert to help you.