Frontiers_2009_Role_of_Technology_in_Small_Business_Success

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The Role of Technology in Determining Small Business Success:

The Role of Technology in Determining Small Business Success - Frontiers in Services Conference - October 31, 2009 Prof. P.K. Kannan Director, Center for Excellence in Service Robert H. Smith School of Business Charles Colby President Rockbridge Associates, Inc. Dr. Satyam Priyadarshy Chief Knowledge Officer Network Solutions, LLC Eric Akunda Vice President Network Solutions, LLC

Agenda:

www.rockresearch.com Agenda Introduction to the SBSI Internet Business Solutions and their Relationship to Success How does Technology Help Small Businesses Succeed?

The Small Business Success Index:

The Small Business Success Index

The Research Study:

The Research Study Telephone survey of America’s small business owners Conducted semi-annually Purpose is to track the competitive health of small businesses over time Survey is sponsored by: Survey is conducted by:

SBSI Framework:

SBSI Framework

What is the SBSI?:

What is the SBSI? SBSI is based on 28 questions and compiled into 6 distinct dimensions: Capital Access Marketing and Innovation Workforce Customer Service Computer Technology Compliance The dimensions were identified through factor analysis (PCA) and have a high degree of reliability (Alphas range from .68 to .85) Six dimension scores are combined and weighted based on their correlation with goal achievement

Examples of Index Components:

Examples of Index Components How successful is your organization in each activity? Capital Access Having enough capital, internally or externally, to invest for the long term Always having enough working capital to fund your short term needs Getting the advice you need to manage the financial aspects of your business effectively Marketing & Innovation Positioning your organization as having the same capabilities as big organizations in your industry Identifying new prospective customers Workforce Training and developing your employees Providing the right rewards to employees to motivate them Service Ensuring your customers are satisfied Technology Making technology work effectively in your business Compliance Complying with laws and regulations

The SBSI Classifications:

The SBSI Classifications

Small Business Success Index Score Card:

Small Business Success Index Score Card Core Strengths of Small Businesses America’s Small Businesses Average a “C” Most Challenging Areas for Small Businesses

Strengths and Weaknesses of Small Business:

Strengths and Weaknesses of Small Business High Importance to Success High Low Low Success in the Area FOCUS HERE

Technology Deployed by Small Businesses and Its Impact on Success:

Technology Deployed by Small Businesses and Its Impact on Success

The Focus of the Research is on “Internet Business Solutions”:

The Focus of the Research is on “Internet Business Solutions” Fastest growing solutions based on intentions to use in the next 2 years

Which Technologies are Most Associated with Small Business Success?:

Which Technologies are Most Associated with Small Business Success? The strongest drivers of success are technologies that augment marketing or customer service, or help the business run more efficiently Key technologies: Search Engine Optimization (SEO) plan Online advertising Customer service area on website Network for employees to share documents A combination of technologies is more important than any single technology

Small Businesses that Use More Internet Technologies are More Competitive:

Small Businesses that Use More Internet Technologies are More Competitive Competitiveness by Internet Technology Usage Number of Internet Business Solutions Deployed 6 to 14 (n=313) 2 to 5 (n=376) 0 to 1 (n=311) Highly Competitive 31% 24% 19% Marginally Competitive 32% 25% 29% Marginally Failing 25% 30% 25% Failing 14% 20% 24%

Relationship Holds up for “Very Small” Businesses:

Relationship Holds up for “Very Small” Businesses Competitiveness by Internet Technology Usage - Businesses with Fewer than 5 Employees - Number of Internet Business Solutions Deployed 6 to 14 (n=313) 2 to 5 (n=376) 0 to 1 (n=311) Highly Competitive 31% 24% 20% Marginally Competitive 29% 28% 28% Marginally Failing 26% 29% 25% Failing 14% 20% 27%

Business and Owner Traits of Tech-Powered Small Business:

Business and Owner Traits of Tech-Powered Small Business Entertainment/food/lodging, professional services, and financial/real estate services Larger sales: more likely to have $500K+ in annual revenue Larger workforces: more likely to have 20 – 99 employees Multiple locations National/global trade coverage More likely to be in industries that are growing and affected by globalization Not much difference by age or gender Tech-powered small business owners tend to be more educated Business Traits Environ-ment Owner Traits

How Does Technology Help a Small Business Succeed?:

How Does Technology Help a Small Business Succeed?

Role of Technology in Achieving Business Goals:

Role of Technology in Achieving Business Goals Technology-powered small businesses are more successful in: Increasing company value Improving profit margin Growing Revenue (perceived and actual) Not much relationship to: Minimizing costs Reducing risks Meeting owner income objectives Growing at the right pace Building owner wealth Attractive lifestyle for owners

Technology Likely Drives Success by Supporting Marketing and Innovation:

Technology Likely Drives Success by Supporting Marketing and Innovation Mean Index Scores by Internet Technology Usage Index Component Number of Internet Business Solutions 6 to 14 (n=313) 2 to 5 (n=376) 0 to 1 (n=311) Overall SBSI 78 75 73 Capital Access 70 68 67 Marketing & Innovation 75 70 68 Workforce 80 78 77 Customer Service 90 90 90 Computer Technology 82 74 70 Compliance 91 88 88

Marketing & Innovation Area is a Struggle:

Marketing & Innovation Area is a Struggle Selling and marketing are challenging for more than half of small businesses } Surprisingly, innovation is not easy for small businesses

Changes From December 2008 to June 2009:

Changes From December 2008 to June 2009 The advantages of tech-powered businesses has moderated A key factor may be the recession, which by June seriously affected almost ½ of small businesses in the U.S As the economy improves, internet technology may be key to success by allowing them to market and service new customers efficiently More analysis is needed in the future that takes into account the time variable

Thank You! For more info: Charles Colby ccolby@rockresearch.com 703-757-5213, x12:

Thank You! For more info: Charles Colby ccolby@rockresearch.com 703-757-5213, x12

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