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

September 30th, 2010 ::

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

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Posted in small business, Small Business Success Index, Technology | No Comments »

Working Abroad: What It Takes and When It Makes Sense

September 28th, 2010 ::

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

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Posted in Small Business Success Index, Workforce | No Comments »

Turning Around the Small Business Workforce

September 23rd, 2010 ::

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

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Posted in Entrepreneurs, small business, Small Business Success Index, Workforce | No Comments »

Turning to a Global Workforce Creates More Small Business Opportunities

September 21st, 2010 ::

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.

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Posted in Entrepreneurs, Marketing, Resources, small business, Small Business Success Index, Technology, Workforce | 2 Comments »

SBSI: Marketing Is Increasingly Difficult for Small Businesses

September 17th, 2010 ::

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?

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Posted in Marketing, small business, Small Business Success Index | 3 Comments »

Small Businesses Focusing on Increasing Training and Development of Employees

September 16th, 2010 ::

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

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Posted in Small Business Success Index, Uncategorized, Workforce | No Comments »

SBSI: Small Businesses Love Social Media

September 15th, 2010 ::

While reading through the latest Small Business Success Index report, I have to say I was surprised at the heavy emphasis on, and analysis of, small businesses and their love of social media.  Though we all know what I think of social media, I am happy to see small businesses embracing it because it is one more way for us to level the playing field with bigger companies.  If we keep our websites up-to-date and put thought and effort into our marketing, customers have no idea if we’re a one-man show or a small firm, whether we work out of our home office barefoot or have a gorgeous office suite in a green building.

Despite the emphasis on social media, I honestly thought more small business owners would be using social media. 20% (out of 500 small business owners) isn’t a lot, though 14% of those surveyed said they plan on joining the social media bandwagon over the next 2 years (also not a lot).  (Of those who use social media, most use FaceBook (82%), followed by LinkedIn (38%) and Twitter (30%).)

In just 6 months since the last SBSI report, small business owners shifted the role that social media plays in their marketing efforts:

…Expectations of what social media can do for their business has changed in the past six months, as now more small businesses expect social media to build awareness of their organization (77%) rather than attract leads (71%), a reverse of six months ago.

Small business owners are also using social media to stay in touch with current customers.  Both are smart moves.  To consistently identify and nurture leads requires so much time and energy that you need to have an employee dedicated to social media at least part-time.  Don’t forget that you already spent time and energy to attract your current customers.  Focus more of your time and energy on them, especially the ones that spend the most money and that you genuinely like.

Using social media to build awareness is smart for another reason.  Building awareness is a critical component of marketing—you have to market your business to find new customers.  I think if small businesses continue to focus on awareness, they will organically attract leads and   customers will start coming to them rather than the other way around.

There is one caveat to using social media, though: it requires and rewards creativity.  If you’re having trouble thinking of creative ways to market your business, you are probably not one of the 20% using social media right now.  Here’s what you need to do: start finding companies to follow (on Facebook) that aren’t necessarily in your industry.  Veuve Clicquot, Mashable, JCrew, and Vogue all do a great job, in my opinion, of posting a variety of content: photos, videos, questions, contests, news, etc.  Learn from others.  Remember, imitation is the sincerest form of flattery!

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Posted in Entrepreneurs, small business, social media | 4 Comments »

Show Me the Money, or at Least Where I Can Get Some

March 12th, 2010 ::

Remember the film Jerry McGuire? In the film, Cuba Gooding who plays the star football player and only client of sports agent Jerry McGuire, played by Tom Cruise. As he is negotiating for his client, they start trading the mantra “show me the money” and increase in volume until it is a cry for getting the most for what you do.

For the past two years, small businesses have been challenged about getting banks to “show them the money “and get loans or other sources of capital to run their business. Over the last year the Network Solutions and the Center for Excellence in Service at the University of Maryland’s Robert H. Smith School of Business has released the findings of their Small Business Success Index survey. 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; on February 16, the third edition came out and capital access got even lower marks this quarter with a D+. We are going to dive in and see what the challenges are facing small businesses with getting access to capital.

Everyone Talks About a Tough Economy. Are We at the Bottom?

If you listen to some news reports, the economy is a major factor holding back the success of small businesses. The economic outlook deteriorated in the first half of the year, and has not improved between June and December.

From the SBSI report, “Has the economy hit bottom? Half of small businesses – 50 percent – have been highly impacted by the downturn in the last 12 months, compared to only 36 percent a year ago. In the past six months, the recession has touched more small businesses. In June, one out of four small businesses (25 percent) had been minimally impacted by the recession, but by December, less than a fifth (19 percent) had been minimally impacted”.

Another interesting factor from the report is that “half of small businesses – 50 percent – have been highly impacted by the downturn in the last 12 months, compared to only 36 percent a year ago”. This data was supported from the fact that in the past six months, the recession has touched more small businesses. In June, one out of four small businesses (25 percent) had been minimally impacted by the recession, but by December, less than a fifth (19 percent) had been minimally impacted.

Getting Creative to Get Capital to Make It Through

The sources of funding relied on by small businesses has changed markedly in the past 6 months as cash reserves and traditional funding sources have disappeared. The following are steps taken in the past two years and how this has changed since the last survey wave in June:

  • Almost half of small businesses (46 percent) have met their capital needs by cutting their own pay; just six months ago, only a third (33 percent) had resorted to this step
  • 42 percent have had to take a loan from owner savings, compared with only 32 percent six months ago.
  • 39 percent have relied on credit cards (compared to 33 percent in June)
  • 33 percent used a business line of credit (compared to 31 percent in June)
  • 21 percent used a bank loan (20 percent in June)
  • 14 percent took out a home equity loan (10 percent in June)

The SBSI survey found that few have relied on outside investors (5 percent) or SBA loans (4 percent), and only a fifth report having relied on no special funding sources in the past two years. Bank loans have become increasingly scarce. A fifth (18 percent) of all businesses indicate the source has gotten scarcer in the past year, compared with just 13 percent noting this in June; among those who took out bank loans, 43 percent believe the source is getting scarcer.

There is a light at the end of the tunnel. And it is not a freight train.

Despite all these challenging issues, companies are learning to be lean and do without making their balance sheets primed and ready as the economy improves. Granted, we do need lines of credit and other sources of capital to fill in gaps when customers don’t pay exactly on time but small businesses must meet payroll and keep the lights on. The economy is improving although not as fast as we would like it to, still there is a light at the end of the tunnel and it is not a freight train. It is a sunnier day and a positive P&L report.

Download the SBSI Report Right Now

If you are reading this on the web site, GrowSmartBusiness.com, you should see a link to the report or if you don’t or a looking at this in a feed reader, you can get the report at http://growsmartbusiness.com/wp-content/files/SBSI_February_2010.pdf

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Posted in Capital Access, Raising Capital, small business, Small Business Success Index | No Comments »

Compliance is Easy. If You Love Regulations.

March 9th, 2010 ::

On February 16, 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.  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; compliance got an A-.
The area of compliance, including complying with laws and regulations, keeping customer information secure, and keeping up with laws and regulations. Small businesses are generally successful in this area and have been for the last 12 months the report has been done. This is not bad but there are still some things to address.

Don’t Let the Man Get You Down

According to the SBSI report, even though compliance is not a problem area, 54 percent of owners feel that government regulation is becoming more burdensome. This sentiment has also grown in the past year, raising the question of why small businesses have these concerns. One possible explanation for the perception of increasing burdens may be the economy and how it affects the behavior of governments. Local, state and federal agencies may be becoming more stringent in the enforcement of fines and seeking new ways to tax small businesses in an effort to make up for their own revenue shortfall. One example is real estate assessments, an area where local governments are often accused of exaggerating values when they need to raise revenue.

Protect and Serve….Your Data

The other side of compliance is keeping customer information secure. This does tie into regulations that might apply to some data (HIPPA, Sarbanes-Oxley) but overall companies are up on the technology and have implemented systems to secure and protect data. Where they feel the pressure is the aforementioned burden of government regulation. Currently, small businesses feel they can comply but are concerned that any more regulation might cause them to incur infrastructure and personnel expenses that they are not able to support putting them out of business.

Download the SBSI Report Right Now

If you are reading this on the web site, GrowSmartBusiness.com, you should see a link to the report or if you don’t or a looking at this in a feed reader, you can get the report at http://growsmartbusiness.com/wp-content/files/SBSI_February_2010.pdf.

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Posted in Compliance, Small Business Success Index | No Comments »

Innovate or Perish. Small Businesses are Having a Tough Time Innovating.

March 8th, 2010 ::

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; innovation got a C-.  Let’s see why:

Innovation is Not Just About Creating a Cooler Widget. It is about Business Innovation Overall.

When many people hear the word innovation they immediately think of products like the iPhone that change the landscape and innovate an industry. While not every business can create a product like the iPhone, they can innovate. Slightly less than half of small businesses are successful in innovation. This is around the areas business process innovation, which includes coming up with new ideas before competitors and finding ideas to increase revenue.

The most recent SBSI wave examined marketing and innovation in greater detail, including the methods used by small businesses to attract new customers. When asked about six common categories used to obtain new business, the most common method – relied on by over a third of small businesses – is traditional print advertising such as newspapers, trade journals, and magazines. After this, email marketing is the second most common method used by a quarter of small businesses, and social media marketing which is used by a fifth. Half of small businesses do not use any of the six standard categories for marketing leads, but the majority of these “other” channels consists of reliance on referrals and word of mouth; this includes direct referrals, leads that come to the business because of its general reputation, or referrals by other businesses. Besides referrals, “other” types of marketing methods tend to be idiosyncratic methods related to the business such as:

  • Walk- in traffic
  • Outdoor advertising such as signs and vehicles
  • Farm markets, craft shows, etc.
  • Conferences, trade shows, and meetings (e.g., the Chamber of Commerce)
  • Agricultural commodities markets
  • Directories (print and online)
  • Personal selling and cold calling
  • The GSA Schedule for federal government business
  • Volunteering in the community

The Economy has Been an Innovation Catalyst

An interesting thing I saw in the SBSI is that the economy has a silver lining in a dark cloud. The recession has had some positive effects on small business innovation, including leading them to:

  • Find more efficient ways to operate (72 percent)
  • Find new products and services to meet customer needs (47 percent)
  • Become a better team (43 percent)
  • Reduce inefficient or unnecessary staff (31 percent)

The Economy: A silver lining in a dark cloud. The recession has had some positive effects onsmall businesses, including leading them to:· Find more efficient ways to operate (72 percent)· Find new products and services to meet customer needs (47 percent)· Become a better team (43 percent)· Reduce inefficient or unnecessary staff (31 percent)

The Bottom Line: Innovate or Perish

So you now know that innovation is not just for making newer cooler electronics or widget. It is about innovating with your processes, learning about how to go against your competitors and use tools like social media to stand out. To survive you must innovate or perish. That’s it. So what are you waiting for?

Download the SBSI Report Right Now

If you are reading this on the web site, GrowSmartBusiness.com, you should see a link to the report or if you don’t or a looking at this in a feed reader, you can get the report at http://growsmartbusiness.com/wp-content/files/SBSI_February_2010.pdf

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Posted in Innovation, small business, Small Business Success Index | 6 Comments »

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