Challenges and Opportunities for Small Businesses Online – New Research from Deloitte
Read on for highlights from Deloitte’s analysis which we’ll be discussing in our livestream later today:
Women-owned small businesses are adopting more digital tools. Between 2007 and 2016, the number of women-owned firms increased by 45%, compared to just a 9% increase among all businesses. Deloitte’s research found that women-led businesses are also more likely to be using digital tools. Around 55% of women-owned small businesses are using more advanced digital tools.1 Kim Ormsby, founder of Natural Baby Company in Bozeman, MT knows the value of using digital tools first-hand. She started the company when she was pregnant with her second child and connected with like-minded parents around the world the world using the Internet. “The web is pretty much where all of our growth is happening.”
Rural-based small businesses are less likely to be using advanced digital tools than their non-rural counterparts. Deloitte’s research found that rural-based businesses are not as likely to be using advanced digital tools. While they face many similar challenges to non-rural small businesses, US small businesses in rural areas were twice as likely to report having an inadequate Internet connection. Jim Hobart, co-founder of Alpaca Direct in Hayden, ID, has had to overcome this Internet access challenge to build a thriving yarn and apparel business that serves over 100,000 customers in 30 countries. In a Senate testimony, he discussed the challenges that rural-based small businesses face: “For a small business in northern Idaho, our sales demographics may surprise you. 92% of our annual sales are online. In the USA, our four top selling states are New York, California, Texas, and Florida. We feel that improved Internet access…needs attention. Our competitors in urban areas are operating on the equivalent of a 12-lane freeway while our access to that freeway is a like a worn-out toll road."
The smallest businesses are less likely to be using advanced digital tools.
Deloitte found that only 12% of small businesses with less than 10 employees were digitally advanced, compared to 39% of small businesses with 100-250 employees. While the smallest businesses are less likely to be using advanced digital tools, those that are online are holding their own against much larger competitors. Villa Lagoon Tile based in Gulf Shores, AL has seen the power of digital tools to help them grow. With ten employees, they work on a very niche product - durable cement tiles - and heavily rely on online tools to find their customers. According to John Adams, Director of Technology, “AdWords is really perfect for matching clients and vendors in a niche market. We could never compete with big-box stores on standard tiles. But we can compete for cement tiles thanks to Google search and advertising.”
Small businesses face real barriers to fully using digital tools. When asked what prevents them from using digital tools more, Deloitte’s research uncovered a number of barriers. 40% of small business respondents reported that digital isn’t relevant for their business and 38% said it’s not effective. 34% selected concerns about privacy and security. Small business owners also reported facing resource constraints. 30% said they don’t have enough experience with digital tools, 29% said they have no time to learn about digital tools, and 28% said that digital tools are too expensive.
Next steps for learning more about digital tools. There may some hurdles to using digital tools, but as we learned in Deloitte’s first report, small businesses can greatly benefit from building their presence online and reaching new customers. Many small business owners tell us they want to be doing more with digital, but they often don’t know where to start or have enough time to decide which tools to use. To introduce busy small business owners to digital tools that can help them grow, we designed Google’s Get Your Business Online training program as a way to get started and better understand the value these tools can offer. To learn more about how digital can help your business grow, find a workshop near you.
1. Women-owned businesses using either high or advanced digital tools as defined in Deloitte’s digital engagement ladder