The Christian Entrepreneur » Small Business

What’s Your Small Business Legacy?

Brad Harmon — Fri, 21 May 2010 10:20:56 +0000

We spend much of our time early on as entrepreneurs trying to feed our small businesses to the point that they have enough strength to stand on their own. In many ways, they are like little children we have brought into the world.

We teach them, support them, nourish them, protect them, and we dream about their future. Sadly though, somewhere along the way we tend to stop thinking about them as our babies and start to think about them only as our business. We start to focus in more and more on the bottom line, and if we still have dreams about our small businesses they seem to be only nightmares.

Why Did You Start Your Small Business?

Don’t get me wrong. I’ve seen far too many examples of entrepreneurs so emotionally wrapped up in their businesses that they make very poor business decisions that ruin them financially. Doesn’t there have to be more than just a profitable bottom line though?

What were those dreams that you dreamed about your small business? When you decided to plant that seed in the ground what was it that you envisioned it would grow into?

Is your small business transforming to that vision? What words would your family, employees, and customers use to describe your business?

Framing Your First Dollar

It used to be common to walk into just about any small business and see a framed dollar bill or check on the wall. It was their first sale. A confirmation that they weren’t completely crazy for launching their small business.

I think that this is where those dreams start to fade away for so many entrepreneurs. Their business is no longer a vision in their heads, but a reality. It’s no longer a question of if we can sell our product or service, but how do we get the next sale.

After that first ka-ching of the cash register, our business is measured by how many times it can make the register sing rather than the vision we had before that first sale.

When Does Your Small Business Legacy Begin?

Obviously, the cash registers need to keep humming for your business to survive. It can’t be our only focus as entrepreneurs though unless the only word we want people to use when thinking about our business is profitable.

One of the hardest struggles that larger companies face is changing the culture of their organization. In many ways, a business learns it’s personality and habits early on just like our children do. If we do not focus on our legacy early on, it will become incredibly difficult (if not impossible) to change it as the company matures.

Just look at the headlines over the past few years. Do you think Enron’s founder envisioned its legacy? Will Goldman Sachs’s bail out be their legacy? Will people ever forget this oil spill in the gulf? How did these small business grow into these nightmares?

What’s Your Small Business Legacy?

Your small business will have a legacy. It may be one that is easily forgotten. Or, it could be one that we will never be able to forget. Early on, you still have the choice.

As a Christian entrepreneur, the legacy of my businesses are just as important as any profit and loss statement. I know that one day I will answer for how I’ve operated them.

When all is said and done, I hope that my businesses are very profitable. What a shame though if that is all people remember about them.

Just How Valuable are Customer Referrals Anyway?

Brad Harmon — Mon, 30 Nov 2009 18:08:43 +0000

If you ask any small business owner where they derive the majority of their new business they will inevitably tell you that it’s through word of mouth referrals from their existing customers.

We all seem to know that our existing customers are a gold mine of future business opportunities via their contacts, but why do so many of us fail to convert these leads into tangible results? It seems like too many times we end up getting the shaft while someone else takes the gold.

Last month, I published a post called Is Your Small Business Kissable? where we looked at how small business owners can send the wrong message to their customers when it comes to referrals. So how well are you doing a month later?

Asking for Referrals is SO PAINFUL!

Chances are that you agreed with what I wrote in that post, but quickly got distracted and took no action. Maybe you thought about how you would, or even attempted to, get referrals from your customers.

What did you think? Was it painful? Perhaps, it was even excruciating to some of you? Many gurus will tell you that it’s really not, it’s all in your head.

It’s almost like they are saying, “Quit being a baby when it comes to asking for referrals!” Honestly, it’s pretty hard for many of us to start this conversation with our clients, but I think they’re right.

You started your business to provide a product or service to your customers that was higher quality, more efficient, and greater value than what you saw being offered in the marketplace. Why would you send their friends elsewhere?

“A System! A System! My Business for a System!”

So you don’t want to send them elsewhere, but you need a proven system to convert them? Okay, I’ll buy that. This whole process would be much simpler and less painful with a proven system.

I could give you my system right now, but many of you would probably still fail to use it. Is the system that bad? Is it just a bunch of smoke and mirrors?

No, but here’s the problem. Until you truly see the value in a referral from your customer you will most likely quit the program at the first sign of failure.

An Example Using Just Referrals

Let’s take a small business owner who is just starting out. We’ll call her Jane. Jane has managed to build her business up to 10 clients who on average generate about $5,000 a year in revenue. Looking at her clients, she decides that she is going to ask half of them to refer 2 prospects.

Jane really believes in the customer referral system, so she decides to focus only on referrals. She will not use any other source to generate client leads. Pretty extreme, but if you knew Jane you would understand.

The Assumptions

To make our example realistic, we will assume the following:

10 existing clients
$5,000 avg. revenue/client
50% of clients refer
2 referrals per client
Jane converts 1/3 of the leads
90% retention rate

Show Me The Money!

Here’s what the first year would look like. Multiply all the factors above together – 10 clients * $5,000 per client * 50% referrals * 2 referrals per client * 33.33% conversion * 90% retention = $14,998.50 from referrals bringing total revenue to $65,000.

Year 2 all the same assumptions, except now we have 13 customers. Year 2 revenue from new referrals is $19,305 bringing total revenues to $84,305.

Year 3 all the same assumptions, except now we have 17 customers. Year 3 revenue from new referrals is $25,245 bringing total revenues to $109,550.

Did I Get Your Attention?

Pretty amazing, huh? Plug in your own numbers and see what it would look like for your business. Honestly, these numbers assume a pretty low level of effort in trying to generate referrals. Don’t forget this doesn’t include any other advertising.

Now that you see the true value of customer referrals, how scary does it sound? Is the fear worth letting your competitors take this gold mine away from you?

What’s that? Oh yeah, what is my proven system? I will be sharing that with you over the next few weeks, so make sure you come back. Better yet, why not Subscribe to My RSS Feed so you are sure not to miss it? It’s free, what do you have to lose?

What are People Saying Online About Your Small Business?

Brad Harmon — Sun, 22 Nov 2009 21:03:07 +0000

Your customers, employees, and competitors are among the millions talking online everyday. Are they talking about your small business?

The rise in popularity of social networking sites like Twitter, Facebook, and YouTube give people more online avenues than ever to express themselves to the world. Once their comments are on the internet they are pretty much there forever. They can quickly be picked up by RSS feeds that redeposit them all around the internet.

Even if the original comment is deleted, chances are high that it has already started to make it’s way through the internet. It’s like ripping open a pillow filled with down feathers on a really windy day. Good luck getting all those feathers back into the pillow!

Wouldn’t it be nice if there was a simple way for you to find out if your small business is being talked about online? If they are talking about you, don’t you want to know what people are saying?

You Got Your Ears On? Set Up a Listening Post

The online world is a big place. There are many places that people could be talking about your small business. You could even be active on the same social networking site where these comments are flying all around you and not know they exist.

Let’s take Twitter for example. You can’t follow everyone so tweets about your small business may never make it to your feed, or if you follow too many people these tweets can get lost amongst all the others in your feed.

You could do periodic searches to find these tweets, but wouldn’t it be nice if you were notified anytime someone tweeted about your small business? This is exactly what a listening post does for you.

A listening post is a query that you set up once that automatically updates itself and notifies you whenever it finds anything that matches your query. You can set these giant electronic ears up on almost every social networking site or search engine.

What Should You be Listening to with Your Listening Post?

Okay, that sounds great. What should we be listening for though? Well, pretty much anything your heart desires. Here are some possible ways you may want to consider.

Customer Feedback

The first query for your listening post should be your company’s name. Hopefully, your company name is unique enough that you won’t pick up interference in the form of hits on other company’s with the same name.

Employee Activity

A disgruntled employee, either current or former, can be very damaging to the reputation of your small business. Setting up a listening post to gather this information can help you effectively stop and counteract the damage done.

Competitor Analysis

Just like people are talking about your small business, they are probably talking about your competitors too. If your competitor is getting rave reviews then you can look at what they are doing well and incorporate it in your small business.

If there are complaints then you can make sure your small business is not making the mistakes, or perhaps it is an area where you excel and can market to these potential customers.

Where Should You Set Up Your Listening Posts?

You want to set up your listening posts anywhere your customers hang out online. Social media networks are becoming more specialized so do a little research to find out which ones your customers would be most likely to use.

Over the next several posts in this series, we will look at some of the most popular social media networking sites, how you can use them, and how to set up listening posts on these networks.

5 Ways to Tell if Your Small Business is a Social Media Lemming?

Brad Harmon — Fri, 13 Nov 2009 23:00:55 +0000

It used to be that only a few people were brave enough to take the leap when a new technology emerged. These early adopters blazed a path into the unknown, while the rest of us stayed at the top of the cliff waiting to hear if there was a splat.

We’ve seen this scenario play out time and time again. Perhaps, it goes back as far as the invention of the wheel or discovery of fire? There are the early adopters, the naysayers, and then there’s the rest of us.

The early adopters tend to be zealots willing to pay exorbitant prices to become leaders in their field, but many just end up being beta testers (kind of like we have been for Microsoft). The naysayers stand at the bottom of the cliff counting all of those who do not survive the leap as evidence that none should jump.

Recently, however, many of the wait-and-see crowd have taken the plunge off the cliff following the early adopters just like a group of lemmings. The thuds on the ground below from the failure of small business social media strategies have been drowned out by the social media cheerleaders at the top.

Developing a Social Media Strategy for Your Small Business

Did I say it was small business social media strategies that were failing? Let me be more specific. It is the Social-Media-for-Dummies type of how-to advice from would-be gurus that many small business owners are calling a strategy that’s failing (a mouthful, I know).

Social media is a great tool in the right hands, but in the hands of someone that does not know how to use it properly it can be disastrous. Even if you have been properly trained on how to use a tool, it does not mean that it is the proper tool for the job.

It also doesn’t guarantee that if you follow a guru step-for-step that you will be able to repeat their results. It’s like saying you can sculpt The David by knowing how to use a hammer and chisel and reading a book on Michelangelo’s methods.

So, what is a small business owner supposed to do with social media? You must first sit down and develop a strategy. Go back to grade school. Ask the five basic questions – who, what, when, where, and why.

Who are You Targeting with Your Social Media?

It isn’t that surprising that many small business owners fail to reach their target audience with social media. Most of them have never defined their target customer offline either.

Jumping on the Twitter or Facebook bandwagon because you read how much traffic these sites receive, or that some guru had great success there, doesn’t help much if your potential or existing customers are not there.

If you do not know who you are targeting it’s not likely that your message is going to hit the mark. Knowing your audience is the very foundation of any good advertising or marketing campaign. Be as specific as you can.

Have an image of this person in your head when you develop, and later implement, your social media strategy.

The Whats to Ask about Your Social Media Strategy?

There are many whats that you can ask when it comes to social media.

What are Your Target Customer’s Interests?

Now that you have a specific image of your target customer, what do they care about? A cardinal rule of selling is that you don’t sell the product or service, you sell the benefits. You need to know what your customer cares about to know how your product or service benefits your customers.

What do You want to Say to Your Customers?

What is it that you want to say to your customer? Nothing is worse than finding the right target but delivering the wrong message. Too many times I see small business owners babble on about random subjects often having nothing to do with their business. If you don’t have a defined message then you will not be successful with social media.

What is This Going to Cost Me?

Most social media networks are free to use, but that does not mean there isn’t a cost. Effectively using social media will require a lot of time, either your time or someone you hire. Depending on your computer and marketing skills, and your desire to climb the steep learning curve, the costs can quickly become prohibitive for a small business to implement a full social media strategy.

When Should You Implement Your Social Media Strategy?

Social media is just one tool in your advertising and marketing arsenal. It is rarely effective on its own; however, when used in connection with traditional tools and leveraging other online tools it can be very effective. If these other tools are not in place, your social media efforts may be in vain.

Where do Your Customers Hang Out?

The last thing you want to do is show up at the wrong party or to throw a party and have nobody show up. Do your research when it comes to social media networks. Find out which networks your customers, or potential customers, are using. A tree may make a sound when it falls in the forest, but if nobody is there to hear it who cares?

Why do You Want to Use Social Media?

This is probably the most telling question of all. Why do you want to use social media? What is it that you expect to receive?

If the answer is that everyone else is doing it, or some guru told me I needed to do it, then you are probably a social media lemming. If you do not understand why you are using social media, it is very unlikely that you will be effective with it.

The Shameless Self-Promoter Keller Hawthorne (3/3)

Brad Harmon — Fri, 13 Nov 2009 00:08:36 +0000

Keller Hawthorne, FresheVenture

This is the final installment looking at Keller Hawthorne’s site, FresheVenture.com. In part one, we learned how she uses original content, along with sound SEO strategies, to develop her website like prime real estate. In part two, we saw how she increases the value of this real estate by driving traffic to her website with give-aways, contests, and interviewing the movers and shakers in her industry.

In this post, we will look at some of the strategies Keller employs when it comes to off-page marketing. Normally, when you hear off-page marketing, you think of online advertising, email marketing, forum/blog commenting, and social media.

Keller espouses these strategies, and appears to have practiced them early on, but there has been little activity of this sort lately (at least that I could find). Instead, I was surprised to find that her approach to off-page marketing is to bring it back to her own website.

Get Reviewed by a Big Name

In the previous post, we saw how Keller sought after, and received, the attention of Yaro Starak through reviews of his products which eventually led to an interview with him. In this example, she set her sights on John Chow.

While promoting one of Yaro’s courses, she received an email from John Chow, who was also promoting the course. He was offering a free website review of her site (he normally charges $500) if she ordered the course through him. Having planned on signing up for the course anyway, she jumped at this opportunity.

The review, Boost Your Internet Business with Fresh eVenture, was seen by thousands of his readers. It was great exposure for Keller from a guru in her industry. Perhaps, it was a little too much exposure. Why?

How to Handle Critics and Hecklers

The exposure caught the attention of one commenter who attacked both John Chow and Keller for the review. It wasn’t just a critic, the commenter was quite vulgar and viciously attacked Keller’s credibility. Not only did he attack Keller on her own website, he repeated his attacks by posting his comments on John Chow’s site as well.

There’s two sayings that come to mind when facing a situation like this.

First, there’s no such thing as bad publicity.
Second, when life throws you lemons, open a Starbucks …err I mean lemonade stand.

So what did Keller do? She turned the comments into a blog posting on her site. You can read about it all in My Controversial Blog Review on John Chow Dot Com.

This post fanned the flames of the controversy sending more traffic to John’s site to defend Keller, which, in turn, caused more people to read the review and visit FresheVenture.com. It also generated many comments, and still catches attention of new readers weeks after the fact.

Give an Interview to an Upcoming Blogger

This is not the only time that Keller has managed to take a traditional off-page marketing tool and bring it back to her website. Jared Little, from The Money Cult, followed the example Keller set in part two of this series. He participated in Keller’s Best WordPress Design 2009 contest, and after catching Keller’s attention, he asked to interview her.

Keller agreed to the interview, and brought it back to her site through her post, The Money Cult Picked My Brain – Listen to My First Phone Interview!, announcing the interview and sending traffic to Jared’s blog. She also used social media sites like Twitter to drum up excitement and send traffic to the post she made on her own site.

You can listen to the interview, My 1st Phone Interview – A Real Life Success Story, on Jared’s site. It’s a great interview. It was also a great win-win situation, and an excellent example of shameless self-promotion. In this situation, to help the new blogger meant that Keller had to publicize the interview about herself.

Of course, she could have just sent all the traffic to Jared’s site without publishing a post on her site, but this would have reduced the traffic she received (and most likely Jared received) and would have cost Jared a link from a highly ranked site – a lose-lose proposition. She could also have not promoted the interview at all, like some gurus, and just take in the free traffic from Jared’s efforts.

Become a Guest Blogger / Bring in a Guest Blogger

I wasn’t able to find any examples of Keller writing a guest blog from her site, but as I pointed out in part one, her older posts are hard to find since there is no well organized archive page. By now, we should know Keller well enough to know that, if she were to be a guest blogger on another site, she would have found some way to bring it back to her own site.

Too many bloggers treat a guest blog post like a banner ad with the purchase price being their post. They do not actively try to drive traffic to the post, they do not bring the post back to their website following Keller’s examples, and they do not monitor and respond to the comments as if they were made on their own blog.

Perhaps, this is why so many bloggers treat guest posts like a red-headed step-child just filling a posting spot while they take a break. Why should a blogger who is sharing their audience through a guest post spot help promote the post if the guest blogger doesn’t?

And That’s a Wrap

There is so much more that I could write about Keller’s blog. It has truly been a great resource for me as I launched my blog and continue to build my audience. I hope that you found this information helpful.

If you missed the first two parts of this series, you can find them using the links below. Next time, as we continue our blog walking, we will look at a great site that walks you step-by-step through setting up your own WordPress blog.

The Shameless Self-Promoter Keller Hawthorne (1/3)

The Shameless Self-Promoter Keller Hawthorne (2/3)

DISCLOSURE: This is not a paid review – there is absolutely no compensation of any kind associated with this post. The owner of the website was not made aware of the contents of this post prior to it being posted on my blog. Unless disclosed elsewhere in the post, no notification of the post was provided to the owner of the website prior to it being posted on my blog (Since the first two posts in this series were labeled x/3 the owner knew to expect 1 more posts. No other notice was provided.). All logos or images from the website were used without prior permission and will be removed from the post upon request of copyright owner.

How Plastic Surgery is Helping Small Business Entrepreneurs Succeed

Brad Harmon — Wed, 11 Nov 2009 00:39:00 +0000

There is a pill for just about everything today, but the largest problem facing most small business entrepreneurs requires a much more invasive procedure – plastic surgery.

The Use of Credit Card Debt by New Firms, a report released in August by the Kauffman Foundation, found that those startups which relied more heavily on credit card financing were more likely to fail. How likely?

Well, during its first three years, for every $1,000 dollars in credit card debt there was a 2.2% increase in the likelihood that the small business would be forced to close its doors.

The study points out that there are numerous reasons why new businesses fail, but proves that credit card debt plays an important role.

This study shows that credit card debt does play a role in business closure in the first few years of operations. And, while it is not the only determinant of a business’s stability, it appears to be an important factor in a firm’s likelihood to survive.

Why Credit Card Debt is So Appealing

Over the past several years, credit card companies have slowly replaced traditional lenders to small business. In fact, they are now the top lenders. Nearly 6 out of every 10 small business startups use credit card debt to finance the launch of their company.

The report lists multiple reasons why credit card debt is so appealing.

It helps small businesses manage their finances and streamline payments.
Credit cards are easier to get than traditional bank loans or government business grants. It
- does not require a business plan, or
- months waiting for the loan to be approved.
It’s useful for smoothing revenue streams, especially at the startup phase of operations.
Credit Cards are accepted everywhere. A variety of supplies or even cash can be obtained with one.
Credit cards are a somewhat anonymous funding source. Unlike other types of loans (those from family, friends, banks, etc.), credit card companies will never ask where their money went.

Why Credit Card Debt is So Dangerous

Whenever we take on debt as small business owners, we also assume the risk and restrictions that the debt places upon us. So why single out credit cards?

Credit Card Debt is Expensive

The main problem with credit cards is that they are an expensive way to finance a business. Interest rates on personal and business credit cards average around 15 percent and can be above 30 percent in extreme cases.

Credit Card Debt Undercuts Successful Business Principles

Two of the items above that make credit cards so appealing do so because the undercut two important business principles – planning and accountability.

First, traditional lenders require small business owners to submit a business plan, but credit card lenders do not. Sadly, without this requirement, many small business entrepreneurs never write a business plan thus increasing their odds of failure.

Second, since credit cards companies never ask where their money went, small business owners lose the sense of accountability and restrictions that come with traditional loans. Given the anonymous nature of credit card spending, small business entrepreneurs are more likely to make unwise purchases.

How Plastic Surgery Helps Small Business Owners Succeed

The study found that 58% of new businesses relied on credit cards to finance operations during their first year of business. Nearly 1/3 of these businesses carried a revolving balance, and at the end of 2004 (the first year of the study) had an average balance of $3,500 across all businesses. Of those that had a balance, the average balance was about $11,000.

When the study looked at the next two years, it showed that …

credit card debt increases and then eventually stabilizes to a manageable level during many firms’ first few years of operation, while firms with high-credit-card debt close and successful firms start paying off their debt.

It is those companies that undergo plastic surgery by cutting up their credit cards and paying off the balances that survive. Unfortunately, the report does not show the results for those companies that refuse to use credit card debt at all.

Small Business Owners Likely to Keep Using Credit Cards

The sad truth is that, despite the findings of this study, the use of credits cards by small business owners is likely to only increase. There is a perfect storm brewing that will swallow up many small business entrepreneurs if they are not careful.

What is this perfect storm?

The appeal of credit cards has not changed.
Credit card companies are stepping up their efforts to market credit cards to small business.
Lack of alternative financing for small businesses in this economic climate.

Consider the following statement from this report …

With the recent contraction of credit markets, many new businesses will face difficulties in accessing traditional forms of credit, which likely will create greater demand for credit cards.

Combined that with this statement from the same report …

While credit card debt provides needed short-term funding, reliance on this type of financing may lead many businesses into a long-term liquidity drain that affects their financial stability—and thus survival.

If these two statements prove to be true, it will not be good news for small businesses.

Does this report reflect what you are seeing in your own business or in the businesses of others you know?

Is Small Business Saying No Thanks to Social Media?

Brad Harmon — Sun, 08 Nov 2009 00:13:38 +0000

With the phenomenal growth of social networks over the past two years, one has to wonder if this is not another example of the chicken versus the egg. Has social media become so popular because of the tremendous press coverage, or has the coverage led to the growth?

Honestly, I don’t know. To quote Rhett Butler, “Frankly, my dear, I don’t give a …” The fact is that it is here, and it is dominating web traffic. The question we should be asking is, “What are we, as small business entrepreneurs, going to do with it?”

According to a recent survey by Citibank/GfK Roper, the answer for many small business owners appears to be nothing at all. In a press release last month, they dealt a blow to social media advocates with some pretty stunning, and somewhat unexpected, findings.

Citibank/GfK Roper Survey Results

The telephone survey was part of a larger survey on small businesses and the economy. The survey, conducted in late August, was of 500 small business executives with fewer than 100 employees.

Here’s what they found …

78% did not find social media sites effective in generating leads.
86% have not used social media sites to get business information or advice.
61% rely on search engines or sites like WSJ.com to gather business information.
10% sought information or advice from blogs.

Maria Veltre, Executive Vice President of Citi’s Small Business Segment said,

Our survey suggests that small business owners are still feeling their way into social media, particularly when it comes to using these tools to grow their businesses. We were very surprised we did not see more use of some of the social media outlets, even if just for advice.

Are Small Business Owners Abandoning the Internet?

Small business entrepreneurs are not forsaking the internet though. It just seems that sites like FaceBook, Twitter, and LinkedIn are not seen as essential to them according to the survey. Ms. Veltre went on to say,

What this survey indicates to us is small businesses are very, very focused on running their business and on generating sales and managing their cash flow and doing the things that are really important, especially in these economic times … I don’t think quite yet the social media piece of it has proven to be as significant.

So what are these “really important” online activities? The survey found that …

42% have made greater use of their website to generated leads and sales.
- It grew to 57% among those with 20 to 99 employees
28% used email marketing to generate leads and sales.
25% advertise online to generate leads and sales.

Is Social Media a Waste of Time for Small Business?

Critics of social media point out that we have been down this road before. They point to the lack of value, or clear return on investment (ROI), as justification for small businesses to stay away from social media. Their sentiments may be best summed up by a comment made in response to Largest Social Media Study to Date Released – What Does it Mean for Small Business?, my first post in this series. You can read the comment here.

Ms Veltre offers this possible explanation,

While social media can provide additional channels to network and help grow a business, many small businesses may not have the manpower or the time required take advantage of them.

Both certainly have valid concerns. Employing an effective social media strategy requires either a lot of time to get over the learning curve or money to pay for someone else to implement our strategy. It would be nice if we had a clear ROI history for social media, but I am not expecting to see reliable across-the-board reporting like that any time soon. It’s just too early in the game and social media networks are still evolving.

What Does this Mean for Small Business?

I think it is hard to just ignore social media as a small business owner. It is certainly not going to be the panacea for small business owners that some are claiming, but at the same time, I think it deserves a place in your advertising and customer relations strategy.

As I pointed out in Is Your Small Business Taking Googlebot by the Hand?, never count out Google. As this survey showed, it is still search engines that small business owners are turning to on the internet. Where are your customers turning though?

Now that Microsoft’s Bing has announced they will start indexing Twitter and Facebook what will it mean for the online landscape? Again, I must say that I honestly don’t know.

My advice is to stick with Google using the best search engine optimization (SEO) techniques for your website, blog, and social media accounts. Treat social media as a never-ending networking event where you make those first contacts and build relationships.

Largest Social Media Study to Date Released – What Does it Mean for Small Business?

Brad Harmon — Fri, 06 Nov 2009 17:00:41 +0000

What does the new study mean for small business entrepreneurs?

Business.com released their 2009 Business Social Media Benchmarking Study yesterday. The study, conducted during August of this year, is the largest to date polling nearly 3,000 business professionals from the United States and Canada.

Vice President of Marketing for Business.com, Ben Hanna, Ph.D., said:

This survey was a way for us to benchmark where businesses, and business people, are finding value in social media in order to further enhance our site offerings and better serve our users.

The key findings of the study are discussed below.

Who is Using Social Media?

The study found that consultants and marketing communications professionals were the most active users of social media. This was particularly true with what they labeled as micro (less than 10 employees) and small (10 to 99 employees) businesses. Ironically, the most technologically savvy, IT professionals, had the lowest participation rate.

Among those who are currently utilizing social media in their day-to-day jobs, 62% visit company or brand profiles on social networking sites. And 55% use these sites for research on company information.

Businesses and employees reported that they are facing a massive learning curve with social media. In fact, the average company in the survey is planning, developing, or running seven different social media initiatives. Around 71% of the companies surveyed, and 65% of the professionals staffing these initiatives, had less than two years experience with social media.

Why are Businesses Using Social Media?

Despite the huge learning curve, the study showed that businesses are banking on social media to help them with two main objectives.

First, they want to use social media to build brand awareness. With the recent success at the box office of Paranormal Activity, they certainly seem to be on the right track. This movie was filmed on a tiny budget, and marketed exclusively through social media outlets. Paramount mainstreamed the advertising efforts recently, but only after seeing how wildly successful it was in limited theaters across the country.

Second, they want to utilize social media to build their brand reputation. As we have seen in recent presidential elections, the influence of bloggers and other social media outlets can quickly capture a news cycle. The speed at which this information can bounce around to millions of people makes traditional forms of public relations almost obsolete. Social media serves as listening posts for companies to gather feedback, and to engage in the conversation while it is happening rather than responding on the evening news.

The largest complaint that companies reported is that they have little to no insight into how well they are performing against these objectives. Lack of standard and easily accessible reporting is to blame.

What Type of Social Media are Business Professionals Using?

It seems that the overwhelming majority of those surveyed, 69% of participants, turn to webinars and podcasts for business information. The past few years has seen a huge spike in both video and audio on social networking sites. In fact, YouTube is now the 4th highest site in the world for web traffic.

Above YouTube, at the number two spot, is Facebook. It is the dominant social network for consumer-focused companies with 83% of participants having at least one profile on Facebook compared to 45% on Twitter. Business-to-business companies, however, maintain profiles on both networks with 77% on Facebook and 73% on Twitter. Twitter is the 14th highest ranked site for web traffic in the world.

The current trend of companies restricting their employee’s access to social networking sites like these may need to be reconsidered given the value in this type of activity.

What Can Small Business Owners Learn from this Study?

Small business owners should be encouraged by the results of this study. With a little guidance and hard work, they can have just as big of megaphone as large corporations. Social media is turning traditional advertising on its head.

It is no longer necessary to have a large advertising budget to be able to market your business, services, or products to millions of people around the globe. Five of the top fourteen websites in the world for internet traffic are social media networks.

The learning curve may be steep, but as a small business owner you have a very focused niche and audience to reach. You are much nimbler and can react faster than large corporations.

In this David vs. Goliath battle, small business has the edge – at least for now.