There are a number of companies and consultancies that produce surveys which assess the current state of small and medium sized enterprises. Among them is a quarterly report prepared by Interland, Inc., a NASDAQ traded hosting and online services company that serves small and medium businesses. This is the 5th time INLD has prepared this survey. Over 1,000 businesses with fewer than 500 employees, revenue from $250K to $5 million were asked about the strengths, weaknesses, opportunities and threats which concern them. For this survey 38% are service businesses, 29% retail, 28% personal services and 5% non-profit. Over two-thirds of the SMBs surveyed have been around 5 years or longer. The results for the Spring 2005 Business Barometer (.pdf presented as a series of charts) are outlined below. Among the findings:
Web savvy: 53% of the surveyed businesses have a web site. 15% of surveyed companies find their web site influences over half their sales. 24% of the respondents use e-commerce on their web sites. Thirty percent of SMBs with e-comm enabled sites get 51-100% of their sales online. 94% of the businesses have internet connectivity and 72% use e-mail to connect with their customers/clients, 56% to communicate with partners and associates and 53% as part of their sales pitch. The majority of SMB owners use online research (only 2% don't) and half use online search to find other local businesses. The other half use Yellow Pages or directory assistance.
The top priorities for SMBs: Revenue Growth (79%), Customer Retention (70%), Expense Reduction (46%)
The strengths of US Business in general: Technology and productivity (49%), democracy (46%), flexible economy and labor force (39%) and one-third cite the quality of the workforce.
How they attract customers: 55% use community relations, 47% use their web site, 31% use public relations/media for exposure, 26% use direct mail and 23% rely on the yellow pages.
Are they concerned about tort reform? 66% rarely worry about being sued when they make a business decision. One-third of respondents thought tort reform may benefit them, most were uncertain (45%) and the rest didn't think it would help. When it comes to policy, SMB owner's rank local issues (52%), state issues (50%) and federal issues (46%) as most influencing their business success.
What keeps SMB owners up at night: Rising inflation (44%), the trade deficit and dollar's value (40%) and energy costs (40%).
Overall a pretty upbeat assessment and continued confirmation that SMBs are using and expanding the use of the Internet and specifically the web in their business activities. We are obviously well past the tipping point and in a remarkably brief time SMBs have adopted and incorporated the web and network strategies into their affairs.
On a less positive note the WSJ's StartupJournal reported the results of a recurring survey that suggests Americans are less optimistic about start-up businesses than just a year ago. 12,000 18-74 years olds were asked about starting or working within a start-up. 20% fewer responded positively representing an extrapolated drop from 22 million to 18 million Americans from a year earlier. Details are here: Fewer Americans Feel Entrepreneurial Spirit
"A substantial number of them don't see starting a business as a good career option right now," said Paul D. Reynolds, the report's author and director of the Entrepreneurship Research Institute at Florida International University in Miami.
Two-thirds of those surveyed are in the process of starting a company, while the rest are operating start-ups up to 3 1/2 years old, but the decline is concentrated among the former group, Reynolds said.
While the survey doesn't get at exactly why fewer people are starting companies, it did find a perceived lack of opportunities among the subgroups where the decline was most pronounced: Men and women 18 to 34, as well as men 35 to 54, according to the report.
The survey did not assess the reasons for this drop and some people thought the results at odds with anecdotal evidence to the contrary or dismissed the large drop as a one time anomaly. It is undeniable that during the Internet bubble that many young firms that got started needed the stimulus of irrational exuberance. As we pass the 5 year anniversary of the heights of the mania perhaps we're just witnessing the post script.
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