Most of the small business economic research that gets published comes from the SBA Office of Advocacy. They publish quite a lot of the stuff, primarily because there isn’t that much of it to begin with and Advocacy is one of the nation’s premier (and pretty much the government’s only) funding sources for this kind of research. So, when there aren’t any research releases from Advocacy for a month, our Research Roundup can get pretty thin.
That’s what happened in October, but there were still a few interesting bits of research released this month. In fact, you might say that Advocacy took a break, but the GAO (Government Accountability Office) picked up the slack.
Small Businesses Do Have Web Sites
Small businesses tend to be pretty tech-reliant, and the smaller they are, the more tech-reliant they tend to be. So understanding how small businesses are using technology remains particularly interesting and important information.
The National Small Business Association (NSBA) seems to think so, anyway. Earlier this month, the NSBA released the results of its annual small business technology survey. And contrary to what I’ve seen in many other research reports on the subject, this one finds that small business owners really are online. Fancy that!
The 2010 NSBA Small Business Technology Survey found that a large majority of small businesses (86 percent) have a website but only 26 percent have e-commerce enabled websites. Almost half (47 percent) say they use social media (e.g., LinkedIn, Facebook) to promote their businesses.
Telecommuting is coming into its own among small business owners, too:
According to the 1997 Annual NSBA Survey of Small and Mid-Sized Business, only 9 percent of small businesses allowed telecommuting. Ten years later, in 2007, that number jumped to 19 percent. Today, 44 percent of small businesses allow their employees to telecommute.
Time and money are the biggest challenges reported by small businesses when it comes to their websites, with 69 percent saying site updates take too much of their time and 37 percent reporting that the cost of maintaining their website was the biggest challenge related to it. Forty-three percent spend more than two hours a week dealing with tech-related issues/problems.
“Small business owners have to serve many critical functions within their businesses, including chief technology officer,” stated Todd McCracken, NSBA president and CEO, in a press statement. “This survey underscores the importance of affordable and user-friendly technology for small businesses.”
Recession Beats Up the Big Boys
The meek didn’t quite inherit the earth during this nasty recession, but the world’s poorer countries with smaller economies evidently did a little better than the large, rich countries with ginormous economies — at least, according to one measure. That is the main finding in a set of reports that comes to us as a combined effort between the Kauffman Foundation and the World Bank.
Or, at least, that’s one way of looking at it.
Turns out that, if you look at new business formation worldwide during the Great Recession, you’ll see that the number fell for the world’s economic leaders.
On the other hand, new business formation didn’t change much in low-income countries, especially in sub-Saharan Africa. Part of the reason was new regulations that made business formation easier; part of it was that those low-income countries never had much in the way of new business formation anyway. You might say, when it comes to going downhill, they didn’t have any further down to go.
We’re measuring new business formation because, you may recall, Kauffman has found that new jobs come from new businesses–which means new business formation gets you out of the recession faster. I guess, in addition to jumping up and down and yelling about the role of new businesses here in the U.S., they want to make sure the rest of the world knows about it, too.
GAO to Microloan Lenders: Say What?
GAO used to stand for the Government Accounting Office, so you shouldn’t be too surprised to learn that the GAO doesn’t really do pure research; for the most part, they conduct audits. In the process, however, they often manage to learn some interesting things about the workings of the government and the ways in which what Congress does may not always match up with what Congress says it wanted to do.
This month, the GAO came up with a rather interesting report on the SBA’s Microloan program, American Recovery and Reinvestment Act funding and, specifically, how much the public knows about said funding and its effectiveness.
This study, even more interestingly, was requested by Senate Minority Leader Mitch McConnell, who recently told the National Journal that “The single most important thing [Republicans] want to achieve is for President Obama to be a one-term president.”
Make of that what you will.
Anyway, GAO found that program participants (i.e., Microloan Intermediaries) should be instructed to provide more descriptive information about how ARRA funds are being used and what outcomes are expected so that the public will better understand those things.
I suspect that plenty of small business owners found out what Microloan is all about last year, when the bankers fiddled while Main Street burned. Microlenders were still lending and, for a moment at least, they were the heroes of the Great Recession.
I’m not clear about what use Senator McConnell intends to make of that information, but I trust he found it interesting, at least.
Which reminds me … Remember to vote on Tuesday. In case you hadn’t noticed, it’s kind of an important thing for small business owners (and everybody else) to do.
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More in: Small Business Statistics
Minor correction: GAO used to stand for General Accounting Office, not Government Accounting Office.
Dawn-This is good data. I was under the impression that only 50% of small business had a website, when it is much higher. I am surprised that a small percentage have commerce websites.
Thanks for a good post.
What is Senator McConnell standing for?
Dawn Rivers Baker
@Minivet: You’re right, my bad. Nice catch. 🙂
@Kip: Yes, I’ve actually seen numbers as low as 27% of small business owners have web sites. I’ve never trusted such numbers (Anita and I have had more than one conversation about how improbable that has always seemed to us because all the SMB owners we know have web sites). I’m glad to see something closer to reality emerge from the data world.
@Martin: You mean, other than making sure that President Obama (a) doesn’t get anything else done while he is in office and (b) making sure he “is a one-term president”? I’m probably not the right person to ask. If you really want to know, I would suggest that you visit his web site: http://mcconnell.senate.gov
I think that banks, no matter how big or small, are quite hard to tap when it comes to getting finances for a startup or small business. This is why microlending still shines like a knight in shining armor come to save the day. Peer-to-peer lending has also been popular among small business owners, and of course, those incubator programs in a hope of finding that venture capitalist or angel investor to take that risk in something any entrepreneur believes in. I don’t know about the stats on web sites though, but thanks for the sharing!
Very interesting data. We didn’t know that 86% of small businesses have websites. Also we didn’t know that SMB owners find that updating the site takes too much of their time and it costs too much to maintain their sites. We at PeopleBees are working solving the these two problems for SMB owners, making it cheaper (free) for them to maintain their online presence while saving time to keep their site upto date.
Thanks for the post Dawn. One note: the sample size (200) from the NSBA survey was done online within their membership, which skews much higher to larger small businesses. Just wanted to point this out, as we’ve seen the number of small business owners with websites much lower than 86%. Might explain why. Best,
Julie Gordon – Deluxe Corporation
I think it really comes down to what your definition of small business is. In the NSBA survey, 39% of participants had 0-5 employees and 66% had less than $500,000 in revenue. Many other studies, use SBA guidelines to define small business in a much broader way (e.g. less than 100 employees). As one who has spent the last 17 years helping small businesses (0-100 employees) leverage technology to their advantage, I can tell you rather definitively that the figure is much lower than 86%.
Hi Jim, I would agree that size does indeed matter. It’s a great point you make.
I rarely come across a sizeable small business (over 20 employees) without a website. That’s my experience when it comes to the larger end of small businesses.
And if I do find a larger small business without a website, it usually can be explained based on the industry they are in. The industry makes a difference.
For those that are in marketing or any kind of tech field, even single-person startups tend to have a website or plan to get one very soon. Many have 5 or 6 sites, when you include blogs. Business owners in those fields need websites.
Yet, a landscaper or plumber may not feel the need to have a website, even if they have 5 or 10 or 25 employees. They may get most of their business through teaming with local building contractors and property management firms; through word of mouth from existing customers; and from yellow pages and local listings. I know all of us who are online-savvy like to think that EVERY small business needs a website, but truly I just don’t believe that’s the case. I think some businesses have a greater need than others. That will change as consumers gravitate more transactions online.
But today, it just isn’t so.