Is Running a SMB Harder Today than Five Years Ago?
Running a small business is tougher today than it was five years ago, according to a new Constant Contact survey.
The “Small Businesses: Then and Now Survey” found that 59 percent of small business owners believe it’s more difficult to run a business today than five years ago, and more than half of those respondents attribute this to the economy. In fact, only 17 percent of respondents say that the economy is better today than it was five years ago. However, the study’s silver lining is that 72 percent of respondents expect 2013 revenues to outperform 2012.
Why is it harder to run a business today?
Out of the 59 percent of respondents who said it’s harder to run a business today than five years ago, 55 percent claim the economy has hit their business hard, 49 percent say it's harder to keep up with technology and 40 percent say there’s more direct competition.
Although only 12 percent of respondents claim that it is easier to run a business today than five years ago, 89 percent of this group cite online marketing tools make it easier and less expensive to market their business. Other reasons small business owners gave as to why it is easier to run a business today include more people caring and supporting local businesses, as well as less direct competition.
For instance, the survey does show that there is an uptick in supporting local businesses. For example, 51 percent of respondents that are locally owned and operated think that it is a major reason why customers support their business, which is up from the 42 percent who thought it was a major reason five years ago.
“Supporting local is a growing consumer trend,” said Gail Goodman, CEO of Constant Contact. “The national discussion about the importance of small business to our economic recovery has raised awareness, as have shop local movements like Small Business Saturday. Local and mobile search is also making it easier for small businesses to reach consumers. When a local restaurant can have its menu, along with that day’s specials, readily available to restaurant seekers browsing their smart phone for a good dinner spot nearby, it’s easy for customers to choose them.”
Dealing with Change
The survey also sheds light on the three biggest changes in how business is conducted today compared to five years ago, with 84 percent of respondents claiming that the biggest change is that they are either using, or using more, online marketing tools. In addition, 59 percent state the general economic uncertainty and 27 percent cite using, or using more, automated business solutions.
Moreover, the study shows that although email marketing has been on an upswing over the last five years (64 percent of SMBs used email marketing five years ago, while 98 percent use it today), social media marketing has also exploded amongst small businesses. In fact, 87 percent of small businesses use social media today, compared to only 10 percent five years ago.
“Social media has created a new, highly-visible channel for small business word-of-mouth referrals,” said Goodman. “The countless word-of-mouth moments that once happened at industry conferences or backyard barbeques are now happening in front of the eyes of business owners and customers alike, right on Facebook, Twitter and LinkedIn. Social media is creating the opportunity for real dialogue and, in the process, is amplifying word-of-mouth referrals.”
However, while some things have changed, the top concerns of business owners remain the same. For instance, 75 percent of respondents say their top concern is finding new customers (compared to 78 percent five years ago), 65 percent are concerned about having enough time to do everything needed to run a business (compared to 61 percent five years ago) and 58 percent are concerned about retaining customers (compared to 49 percent five years ago).
While technology and the economy have certainly changed over the last five years, customers have changed too. The study found that although 55 percent of respondents claim their volume of customers has increased and 49 percent say their customers spend more money now, 63 percent of respondents say that customers have higher expectation today. In fact, 71 percent of small business owners claim customers expect more value today and 52 percent say they expect more discounts, which can make it harder to turn a profit.
The Silver Lining
The economy, technological advances and a change in consumer behavior have all been challenging for small businesses to deal with, which has also made it difficult for some businesses to grow. For example, 54 percent of respondents say they haven’t achieved the growth that they hoped for five years ago. However, small business owners continue to be optimistic, as 58 percent of respondents expect their business to be thriving with more customers and/or employees five years from now, 26 percent say they will be holding steady and only 8 percent say that they could end up closing.
Do you think running a SMB is harder today than five years ago? Let us know in the comment section below.