February Small Business Research Update

February Small Business Research UpdateFebruary was a rather quiet month in the world of small business research. In fact, it’s been a pretty quiet year so far, which might just be a result of the fact that we’re only two months into it. I’m expecting things to begin to pick up next month. Meanwhile, let’s take a look at what the research tells us:

Really, It’s okay. We Don’t Bite.

The National Federation of Independent Business (NFIB) released a study of the small business financing situation this month, entitled Small Business Credit In a Deep Recession. This is a great study, as one expects from the NFIB. Here, they survey small business owners to find out more about the conditions of their businesses and their credit needs in 2009.

The credit situation was certainly poor, with the number of small business owners reporting that all their credit needs were met falling by about half. The big take-away here, though, is that the most immediate economic challenge fingered by small employers was not access to credit (which came in third). Their biggest headache is much more basic:  falling or declining sales.

Which means that all the contortions of the Obama Administration to get banks and other financial institutions to make loans to small business owners seems, from this survey, to be … um … misguided. Lesson #1 for policy makers: if you want to know what small business owners need, ask them.

No Surprises, But Validation is Always Nice

Here’s something you may have heard before: your customers will like you better (and be more open to your upselling attempts) if they think you’ll go to bat for them instead of fretting about your bottom line at their expense. That’s what Forrester Research said in the wake of the release of their 2010 customer advocacy rankings.

Consumer trust in banks and insurance companies is inching back up, according to this survey, but that’s not going to matter much to most small business owners. What does matter is the larger lesson here: customer trust matters, now more than ever.

Quotable quote from Forrester’s press release, from VP and Principal Analyst Bill Doyle:

“Each year, our data shows that customers who rate their firms high on customer advocacy are more likely to consider their firms for additional products. Customers who rate their firms low on customer advocacy are most likely to say they intend to switch firms in the next year.”

If you’re in the IT business, here’s another finding from Forrester that may interest you:  more than half of IT budgets in 2010 will be devoted to software upgrades rather than to new applications, according to their Enterprise And SMB Software Survey, North America And Europe, Q4 2009.

Getting specific to SMBs, 21% of them will upgrade finance and accounting software, 19% will upgrade customer relationship management software, and 18% will upgrade industry specific software.

Also, it turns out that software-as-a-service (SaaS) continues to drive the market and, in spite of the hype surrounding cloud computing and infrastructure-as-a-service (IaaS), firms aren’t quite ready to open their wallets yet.

The moral of this story is that, until companies come out of cost-control mode, the latest gizmo is likely to sit on the shelf for another year.

It’s Been a Trial by Fire

And, finally, it’s been especially quiet over at the SBA Office of Advocacy, the primary repository of small business research in the federal government. Mostly, we saw housekeeping releases from them this month.

That said, if you’re interested in taking a quick look back over your shoulder at the trial by fire that you just passed through (which most people refer to as calendar year 2009), visit SBA Advocacy’s web site to download their Small Business Indicators: 4th Quarter 2009 (PDF). Once you have a gander at all that red ink, you’ll probably feel much better about how your business did last year.

And, if you want to keep up with how Advocacy is doing in enforcement of the Regulatory Flexibility Act and relevant other laws and executive orders, then you’ll also want to review their annual report on the same, Report on the Regulatory Flexibility Act, FY2009.


The third wave of the Small Business Success Index — a joint survey from Network Solutions and the University of Maryland — came out at the end of the month but I haven’t had the chance to review it.  I’ll cover it next month.

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Dawn R. Rivers Dawn R. Rivers, an award-winning small business journalist, regularly reports and analyzes small business policy and research as the publisher of the MicroEnterprise Journal. She also publishes research at the Microbusiness Research Institute and she blogs at The MicroEnterprise Journal Blog.

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  1. SMBs are naturally cautions, so I’m not too concerned by the slowness thus far in 2010. As the economy continues to show signs of leveling I believe that SMBs will slowly start to make some noise.