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Prioritizing the Value of Technology to America’s Small Business Owners
Executive Summary
December 2010 Download Full Report PDF 239 KB
In prioritizing which technology is most important to their companies, America’s small business owners still value business software and their company website more highly than social media sites and services – even despite the significant “buzz” that surrounds this emerging area. While software and core Web presence rank highest in helping small business owners to operate more efficiently and acquire new customers, a new study by The Guardian Life Small Business Research Institute also identified specific segments within the small business community that are clearly embracing social media as a communications and business building resource.
The research, fielded in June of 2010, reveals that “using software to make my business run more efficiently” and “using websites to tell prospective customers about our business” are currently the two most important ways that small business owners tap the power of technology. In contrast, “using social media as a tool for communicating about our company” and “using social media as a way to find out about prospective clients or prospects” ranks significantly lower when viewed, in aggregate, across all respondents. The categories of small business owners where social media is more strongly emerging as an important tool include Women, Millennials, Companies with 10 or more employees and businesses that have experienced – or expect to experience – growth in revenue.
Gender differences regarding the importance of technology are striking. According to The Guardian Life Index, women small business owners are far more likely to embrace technology in all its forms and applications than their male counterparts. Significantly, women entrepreneurs value social media at three times the level of male small business owners. The Institute’s research has previously shown that women entrepreneurs are more customer-focused and more likely to incorporate community into their business plans than male small business owners. These traits may explain why women small business owners are more inclined to embrace new tools like social media to engage with customers and build communities of interest.
Not surprisingly, company size is consistently correlated with the high importance of technology – including the interest in and use of social media. Small businesses with 10 or more employees more intensely value software, websites and social media as tools that can enhance their business operations than companies with fewer staff members. The importance of social media in turn rises as the number of employees grows.
For the first time, The Guardian Life Index looked at generational differences among small business owners. Efficiency-improving software and websites are equally valued across four generations of small business owners: Millennials (under age 28); Generation Xers (age 29-49); Baby Boomers (age 50-67); and Silents (68-85). However Millennial small business owners are far more likely to value social media than any of their generational counterparts. The importance of social media drops consistently from younger to older generations.
A striking bifurcation emerges with regard to feelings about technology and financial performance. Small business owners that expect their revenues to increase by more than 25 percent over the prior year – as well as those who expect their revenues to decline by more than 25 percent in that timeframe – equally value technology at a high level of intensity. Similarly, small business owners that plan to expand their business, as well as ones that plan to downsize, value technology with remarkably consistent views. How might this be explained? On the one hand, small business owners feel that efficiency-boosting software, website utilization and social media applications can help them grow their companies. On the other hand, if they are planning to downsize, they can use those same tools to become more efficient and more effective with less reliance on other resources.