Small Business Owners Poised to Capitalize on Growth Opportunities
Oct 15, 2010
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Despite concerns over the economy, small businesses’ hiring plans are stable compared to the spring, with one-in-four planning to hire over the next six months, according to the American Express OPEN Small Business Monitor.
At the same time, small business owners’ view on the economy has deteriorated. 45% have a positive outlook on the economy and prospects for their business, down from 51% in spring of 2010 and 55% last fall.
The American Express OPEN Small Business Monitor is a semi-annual survey of business owners now in its ninth year.
Over the last 18 months, business owners have been streamlining business operations and cutting costs. As a result, many business owners now appear to be in a stronger financial position to jump on growth opportunities that might materialize. Fewer report having cash flow issues (53%, down from 60% this spring), and while hiring plans remain stable overall, the number of business owners who plan to hire full time employees in the next six months has doubled to 10% versus spring 2010.
More business owners said they thought sales over the next six months would be higher compared to last year (39% vs. 34% in the spring) and employee morale has shown modest improvements.
TAPPING SOCIAL MEDIA
Business owners are also increasingly tapping into social media to reach customers and prospects. Four-in-ten now indicate they use at least one social media platform; Facebook is by far the most popular platform, with 27% of relevant businesses on board. By comparison, only one-in-ten business owners a year ago were using online social networking to market their businesses.
The apparent exponential growth in the use of social media by business owners is rooted in the need to drive demand. When asked about the primary benefit of using social media for their businesses, nearly four-in-ten entrepreneurs (39%) said it increases the exposure of their business.
Social media is a lower cost marketing channel through which business owners can talk directly to consumers, who say they’re more than willing to listen when it comes to special promotions and deals. In fact, consumers said they were most interested in hearing about small business loyalty programs (59%), followed by free trials (49%), rewards or incentive programs (44%) and invitations to new product launches or special shopping days (39%).
“For business owners, social media ultimately should be a two way street. It’s about business owners connecting with customers and customers connecting with businesses,” aid Susan Sobbott, president, American Express OPEN. “More than 10% of consumers we surveyed reported posting a review of a small business through social media channels such as Facebook, Twitter or LinkedIn, and of these posts, two-thirds say the reviews have been positive.”
GROWING BUSINESS THROUGH SERVICE RATHER THAN INVESTMENT
“Over the last two years, many business owners shelved investment and hiring plans and dipped into cash reserves and personal assets to stem the tide of declining sales,” said Sobbott. “Now entrepreneurs are driving more business with existing customers through regular follow-up and better customer service. They’re also tapping into relevant and low-cost marketing tools like social media.”
Small business owners remain cautious on hiring, opting to do so only when business growth warrants it. Of those business owners looking to hire (26% overall), more than three-quarters say the reason is “to handle growing business.” By comparison, only 29% said they would hire for a “new business venture.”
• 72% are working to build better relationships with existing customers through regular follow up
• 34% are actively using social media to keep connected with customers
• 25% are highlighting how their products or services can save customers either time or money
• 24% are bundling products or services to add greater value
• 20% are establishing loyalty programs
• 18% are establishing rewards/incentive programs
• 14% are offering free trials of their products and services
This focus on service and value could strike a chord with consumers, who reported in American Express OPEN research that price, proximity and personalized service were the three biggest drivers in choosing where to shop.
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