Can social media usage become profitable for small businesses? Yes, it can.

It’s only a natural question that small businesses would ask themselves “Does it make sense for me to get involved with social media?” It has the potential to pull you away from other work that needs to done, and sometimes it leads you down a rabbit hole.

But a new study seems to suggest that social media usage can in fact be profitable for small businesses.

Via Small Business Trends:

In June of this year, they [Network Solutions] worked with the Center for Excellence in Service at the University of Maryland’s Robert H. Smith School of Business to survey 500 small business owners by telephone.

According to the Small Business Success Index (download PDF report here), 20% of businesses actively use social media.  The top 3 social sites they use are Facebook (82%), LinkedIn (38%) and Twitter (30%).

Of those who use or may use social media, it’s roughly a breakeven proposition for at least half of them today.  But they have positive expectations for the near future, when 57% expect to profit from their social media activities within the next 12 months.

Here’s a graph of the expectations by these small business, in terms of what they expect social media use to result in after another 12 months.

Whether or not these profits through social media come to pass, one thing is quite clear: Social media is not going anywhere and it is not a fad. Small businesses see social media as a way to market themselves, make connections, and even make sales. And it makes sense. If social media is done properly by a small business, it is not a time suck, it costs almost no money and it can greatly expand your influence. It still has its pros and cons, but social media is something all small business should be getting involved in.

The pros and cons of small business email marketing

Over the last two days we’ve been taking a look at what small business can do in terms of marketing themselves. Our initial focus was on very traditional forms of marketing, like trade shows and word-of-mouth before we moved on to internet marketing. Today we’ll take a look at the last method that small businesses can use: email marketing.

Email marketing

There are two common ways to create an email marketing list. One is to organically grow the list – generally done by asking people directly for their emails or providing them with a newsletter if they give you their email (slow process) – and the second way is by actually obtaining email lists of a potential customer base (fast process). There are a number of sites out there where you can purchase hundreds of thousands of emails that are very focused on specific fields (like construction) for several hundred dollars.

Lets look at the pros and cons of an organic email list.

  • Pros: Most companies offer a newsletter or some kind of information update to people who give them their emails. And when people voluntarily give their emails to you, you are guaranteed to get their attention when you send emails out. The reason why is that these people already recognize your company and are aligned with it in some way.  As you build up this list of people who want to remain abreast of what your business is doing or the valuable information it’s providing, the more powerful your business becomes. You can now reach a large loyal group of people at the drop of a hat.
  • Cons: While the benefits of organically growing your email list are great, it takes a very long time. There is also the danger that once you actually achieve a large email list, people will become annoyed if you try and change whatever message you are generally sending them. Example is if you provide them with a weekly update on the company, but then suddenly begin directly requesting that they buy your new product, you may anger them.

The second way to reach people through email marketing is by purchasing emails, usually ones that are specific to a certain audience, like construction.

  • Pros: This style of email marketing is a quick way to reach a massive amount of people in an extremely short time period. Done correctly, it can also help you build up a large database of users who you can alert to anything at anytime.
  • Cons: This type of email marketing is difficult for small businesses for three very specific reasons.
    1. One: You must first have the capability to send out thousands of emails at once. This is necessary because the clickthrough rate on most cold emails (meaning this person is unaware of your business and has never used it before) is very low, usually from 1-10%. So even though you may send out 10,000 emails, only 100 people may actually read it. It is also not simple to send out a massive amount of emails and avoid being labeled a spammer. A small business could dedicate people at the company to email marketing (but this could pull resources away from where they are need) or it could use an external company to send emails (no concerns about spamming or lost resources, but it can be quite expensive).
    2. Two: You need to go through analytics to determine how the email campaign is doing in order to improve on it. This is time consuming.
    3. Three: There’s a trial and error process to this game. One email may be opened by only 2% of people while another may be opened by 8% of people. In fact, the biggest danger is that it can become an extreme time suck. I was once at a company where three out 15 employees were dedicated to email marketing. Needless to say, the company did not succeed.

That concludes our series on small business marketing. Thanks again for reading.

The pros and cons of small business internet marketing

internet marketingYesterday we began taking a look at what small business can do in terms of marketing themselves. Our initial focus was on very traditional forms of marketing, like trade shows and word-of-mouth. While both are still effective ways to get customers, it’s become more and more apparent these days you need to be on the internet as well. But the internet isn’t necessarily some kind of panacea. It still has its pros and cons like any other form of marketing. So let’s take a look at the strengths and weaknesses of the basic forms of internet marketing.

Search Engine Optimization

  • Pros: Search engine optimization (known as SEO) is a great tool because it doesn’t cost you a dime. The basic concept is that Google (or other search engines) checks your site and its content, and then produces relevant results for the searcher. So anything you type on your web site, from headlines to articles, can be found by various search engines. With a little research, and optimizing your site URLS, you can immediately start producing results for your business web site.
  • Cons: There are a lot of cons to SEO. The first is that although SEO is free, the only way to have it bring in a significant amount of traffic is to have a lot of content. And producing content takes a lot of time – and you’ll likely have to pay someone to do it. There is also the problem that while SEO is a funnel of sorts, it often has very poor conversion rates. Meaning most of the people who come to your site via SEO will likely leave almost immediately. SEO is also a beast all its own. Large companies have entire divisions devoted to it. To really nail SEO you need to do things such as get on Google News (somewhat difficult to do), get meta tags, optimize keywords, create proper URLs, etc. Perfecting SEO is quite time consuming, and not something a small business wants to waste time on.

Google/Yahoo/Microsoft ads

  • Pros: This is a much better funnel than SEO. When someone searches for something specific using any of these search engines, related advertisements to the search pop-up on the screen. Generally, you are allowed to select what keyword searches you want your ad to appear under. So if you make “construction” a keyword for your business, anytime someone types construction in their search, your ad will appear for them. The ads are positioned in an easily viewable area and in most cases, you will not have to pay for them unless someone clicks on the actual ad.
  • Cons: These ads do cost money. And if many people are coming to your web site, but not being converted into actual customers, you’re essentially wasting your money.

Facebook ads

  • Pros: Facebook has become a dominant force on the internet with over 500 million active users, and a very good method for reaching individuals who may be interested in your business. Facebook has data on every single member, and as a result, is better able to pair up an advertisement with someone’s backgrounds and interests than even Google/Yahoo/Microsoft ads. So your advertisements are even more focused.
  • Cons: These ads also cost money. In addition to that, while Facebook is expansive, many businesses (and people who own or operate businesses) avoid it as well. While businesses are beginning to understand its importance, it’s still primarily a social network.

Social Networks (Twitter, Facebook, Digg, MySpace, LinkedIn)

  • Pros: Social networks are quickly becoming the new word-of-mouth. The positives are that word of your business can spread like wildfire. Or, if not wildfire, you can at least begin to get into contact with people that you never would have been able to reach before. Social networks do make creating networks and meeting people with common interests from all over the world much easier. In addition to that, social networks are mostly free and all are relatively simple to use.
  • Cons: Social networks can just as easily harm you as help you. Take for instance this YouTube video (http://www.youtube.com/watch?v=5YGc4zOqozo) mocking United Airlines that has over nine million views in a little over a year thanks to being passed around social networks. The other problem many people have is they believe social networks will instantly provide a boost for their business, when in fact building up a presence on Twitter, Facebook and various other social networks is often a long process. Unless you have instant name recognition, it will likely require some time to become established on these networks. And one of the other important things to understand is that each social network is different. Doing the same thing on Facebook that you do on Twitter will not always produce the same result. Each social network requires some research into how to take advantage of its potential.

Tomorrow we’ll move on to the final part of our look into small business marketing with email marketing.

President Obama signs Small Business Bill into law

Small business bill signingToday President Barack Obama signed into law the Small Business Bill that had gotten delayed in the Senate earlier this month. The law sets up a $30 billion lending fund for small businesses and includes an additional $12 billion in tax breaks for small companies.

Democrats said they backed the bill because small businesses had trouble getting loans after the financial crisis that began in December 2007. They estimate the incentives could provide up to $300 billion in new small business credit in the coming years and create 500,000 new jobs.

Republicans characterized the bill as a smaller version of the unpopular Wall Street bank rescue effort and blocked it in the Senate for weeks until two retiring Republicans broke ranks and voted to end blocking maneuvers.

The question is what will this bill do? Well, the San Francisco Chronicle has six ways the bill will work for small businesses:

  • $30 Million for Lending
    Thirty-billion dollars will go directly to community banks specifically for lending to small businesses. Since 2008 small business lending has dropped by 17.8% according to the Senate summery of the bill and this injection of money is expected to encourage small banks to increase lending. This lending initiative, along with other incentives in the bill, is expected to create at least 500,000 new jobs.
  • Microloans Are a Little Less Micro
    A microloan is a loan for small and home based businesses designed to help in the creation of a small business or aid in their short term capital requirements. It can also be used for up to five years to pay existing loan payments so existing money can be used to continue growing the business. In the past, a business could only access a maximum of $35,000 in microloan funds. That amount increased to $50,000 with the passage of this bill.
  • Bigger Deductions for Startups
    If you are starting your business in 2010 or 2011, the Small Business Jobs Act would increase the amount you could deduct in business startup costs from $5,000 to $20,000. Additionally, other tax deductions including more favorable deductions for businesses who acquire real estate related to their business are included.
  • No Loan Fees
    The Small Business Jobs Act extends the elimination of Small Business Administration (SBA) loan fees. In the past small business owners had to pay loan processing fees to originate the loan. Previous legislation eliminated the fee and the latest bill extended it.
  • Loan Guaranty Increases
    The Small Business Association works with local banks to encourage lending to small businesses. They do this by guaranteeing small business loans by 75%. Should a small business owner default on the loan, the bank that made the loan would only lose a maximum of 25% of the loan amount. The SBA would then pay the bank the remainder of the 75%. Under this new bill, the SBA will guaranty 90% of a loan. This increase should even further encourage local banks to lend to business that may be in distress.
  • Saving the State Initiatives
    Some states have lending funds for small businesses that can prove that additional funding would create jobs. As states face tighter budgets, some of these programs are disappearing. This bill will provide state level funding to allow these programs to continue.
  • Now how do you benefit from this? Well, most of these programs are administered by local community banks so the first thing to do is to go to the Small Business Administration website and find the nearest bank that is a SBA lending institution. Then, contact them and ask when the funding will be available.

    The pros and cons of traditional forms of small business marketing

    When you have a small business with limited funds, it can be difficult getting word out about your business. Do you go the traditional route of local trade shows and word of mouth? Do you hop on the internet and begin experimenting with Google ads and social media? Or do you try something like email marketing?

    The truth is that there are pros and cons to any form of marketing, and in several posts this week we’ll look at both the positives and negatives for a variety of common small business marketing tactics.

    Let’s start with the traditional forms.

    Local trade shows

    • Pros: Even in today’s day and age, meeting people face-to-face is still the best way to do business. Local trade shows provide you with the ability to meet everyone from your customers to your suppliers face-to-face, allowing you to create valuable relationships that can help your business.
    • Cons: There are two large drawbacks to local trade shows. The first is that they’re local. And in this increasingly interconnected world, you may be missing the chance to build relationships with people who are half-a-world away, but can better help your business. Secondly, trade shows are time consuming, and if there’s one thing most small businesses don’t have, it’s time.

    Word of mouth

    • Pros: Traditional word of mouth is oftentimes what begins to truly separate a business from its competitors. If you can reach this point through excellent work or service, and people are lauding your business, then you’re in excellent shape. Leads and jobs will become commonplace. No one will argue with the success positive word of mouth has. And best of all, it’s free.
    • Cons: Traditional word of mouth is something you actually have little control over. You may work hard and provide excellent services to people, but if they aren’t vocal about what you’ve done for them, then your business is not receiving any additional benefits besides compensation. Traditional word of mouth also takes a long to build up, often taking years, if not decades, of top notch work and service to achieve. And in today’s day and age with instant internet marketing, a company that decides to primarily build their business through traditional word-of-mouth marketing is likely to be passed by a more aggressive business.

    Tomorrow we’ll move on to internet marketing.

    Effective Purchasing for Small Business, Blog 5 of 5

    The Buyful Revolution

    The previous posts in this series show how a strategic purchasing process can benefit your small business in many fundamental ways. When you use Buyful to optimize your purchases, you can also save a more valuable commodity: your time. Buyful is designed to revolutionize the way small businesses purchase—delivering all of the benefits of best practice purchasing for very little investment in time and at no cost to buyers.

    Specifying the Items You Want to Purchase

    The second post in this series outlined the benefits of starting the purchase process with a thorough, written specification of the products/services you need. When you create your items specifications with Buyful the process is easy and fast. You can use predesigned templates to insure that your specification is complete, re-use specifications that you’ve previously created, or start from specifications created by other businesses like yours in the Buyful community. In all cases, the standard specification format insures that your needs are clear and complete.

    Choosing Suppliers

    The second post also described how expanding your vendor base can be worth the effort. You just need a better way to both find and evaluate vendors. With Buyful, your vendor search starts from your specification; you get a list of vendors who sell the specific items you need. You can filter the list to show only your current suppliers, suppliers recommended by people you know, suppliers in your region, or all suppliers. When considering new suppliers, you can read reviews from businesses you know who have purchased from a supplier. These trusted referrals can greatly reduce the risk involved in working with someone new. We describe reviews in more detail below.

    Requesting and Comparing Quotes

    Our third post covered the problems associated with comparing bids from different vendors. Even when your specification is clear, vendors might respond with different products or in different formats, making it hard to do an “apples-to-apples” comparison. Buyful gives you an easier way by requiring that suppliers respond in a unified format based on your needs.

    When you request quotes online with Buyful, you are assured “apples-to-apples” responses. All of the quotes follow the same standard format. Any changes from your specified terms are highlighted. There are no faxes or emails to track down. All of you quotes are available to you on your Buyful “home” page. By following the specification-multiple vendor-quote process, you can insure that each purchase delivers the best value to your business.

    Buyful helps you track the items through the receiving and payment process—with all payments conveniently online.

    Delivery and Payment

    Buyful also gives you the convenience of having all of your purchase history in one location. You’ll always know who you purchased from and what you purchased and when. You can track payments, and, if you prefer to pay online, you can pay all suppliers and store your payment information in one, highly secure site.

    Rating and Reviewing your Suppliers

    The fourth post in this series described the benefit of keeping a vendor “report card” documenting how well the vendor performed and whether you recommend using that vendor again. Buyful also makes this process effortless.

    Each online transaction concludes with the opportunity for each partner—buyer and suppler—to provide a descriptive review of the other partner and a rating of the transaction process. After each subsequent transaction between these partners, there’s an opportunity to revise the review and rate the new transaction. In this way, Buyful tracks both overall impressions (reviews) and transaction performance (ratings) over time. In addition, the system provides additional subjective ratings based on factors such as making timely payments and keeping commitments. You can balance these subjective system ratings against the more subjective partner ratings to get an accurate overall assessment of a potential supplier.

    When you use Buyful to search for new suppliers, you can see all ratings and reviews from other Buyful members to whom you are connected. Because reviews are from trusted business partners, you can consider them trusted referrals to new suppliers.

    When you buy, Buyful reviews reduce the risk of working with new vendors. When you supply, positive reviews can deliver new business.

    Join the Revolution, Join Buyful Today

    Buyful offers optimized purchasing free to buyers. Suppliers pay only a small transaction fee on completed purchases. Sign up today to get the strategic benefits of optimized purchasing for your small business.

    Congress approves Small Business Aid Bill

    Small Business Aid BillCongress has just approved the Small Business Aid Bill which establishes a $30 billion government fund to help Main Street banks lend to small businesses. It also would cut taxes on both big and small businesses and boost Small Business Administration loan programs. The bill passed through the Senate last Thursday by a 61-39 vote and it made it through the House today with a 237-187 vote that split along party lines.

    The bill now heads to President Obama’s desk where it will be signed. We’ll have more on this news in a future blog post but in the meantime, but here is a good article from the San Francisco Chronicle about why small businesses should be excited about this bill.

    6 Reasons to be Excited About the Small Business Jobs Act [SF Chronicle]

    Effective Purchasing For Small Businesses, Part 4 of 5

    After a Purchase

    In this blog post, we continue our discussion of how small businesses can use purchasing for their strategic advantage. In the first post, we discussed why purchasing is strategically important. The second post covered how the process begins with a thorough, written specification of the products/services you need and a request for bids from multiple vendors. In the third post, we covered requesting and comparing bids and managing delivery, payment, and your purchase history. In this post we cover what you need to think about after the actual purchase transaction.

    Ranking and Reviewing your Suppliers

    Relationships with your suppliers are crucial. Long-term relationships can lead to lower prices, as your supplier factors your relationship into their price quotes. Likewise, knowing your supplier will deliver crucial components on time and in good condition can reduce some of your business worries. At the end of a transaction, you can keep a vendor “report card” documenting how well the vendor performed and whether you recommend using that vendor again. The next time you request and receive a bid from the supplier you can factor the supplier’s “grade” into your purchase decision. Knowing that you are purchasing from reliable suppliers lets you focus on other aspects of your business.

    Strategic Purchasing: Benefits Beyond Cost Cutting

    When you adopt a strategic purchasing project you benefit your small business in more ways that just cutting expenses and freeing up precious cash to use for growth. Lower supply costs mean you can compete on price, when necessary, to win business. Closer relationships with suppliers can lead to better prices, favorable terms, and referrals to new customers. It’s clear that managing purchasing is crucial, but how do you find the time as a small business owner when your number 1 job is to focus on serving customers and increasing sales? In our final blog in this series, we’ll show you how to do this.

    Small Business Aid Bill Likely Goes to the House for a Vote This Week

    Small Business Aid BillLast Thursday the U.S. Senate voted to approve a Democrat-supported package of small-business incentives, including legislation setting up a $30 billion fund to help community banks offer loans to small businesses. Great news for small businesses.

    Senators voted 61 to 38 to approve the bill. Two Republican senators, George Voinovich and George LeMieux, joined the Democratic majority in voting for the bill. But we’re not through the fire just yet. The House of Representatives is expected to vote on the Senate bill sometime this week. The good news though is that the House of Representatives adopted a similar measure in June, so the Small Business Aid Bill is expected expected to pass the Senate version of the bill to send to the president. After that approval, the bill goes to the White House to be signed into law.

    The measure would provide $30 billion in loans for small businesses and another $12 billion in tax breaks including investment credits.

    [Industry Week]

    Effective Purchasing For Small Businesses, Part 3 of 5

    Purcahsing for small businessesConducting a Bid

    In this blog post, we continue our discussion of how small businesses can use purchasing for their strategic advantage. In the first post, we discussed why purchasing is strategically important. The second post covered how the process begins with a thorough, written specification of the products/services you need and a request for bids from multiple vendors.

    Requesting and Comparing Quotes

    Since your specification details your purchase needs down to delivery and payment terms, you might expect the vendors you’ve selected to provide identical quotes that you can compare “apples-to-apples” in order to select the one that’s best for your business. However, there can be variation in how vendors respond. Some might quote products that don’t entirely meet your specs, or others might quote delivery or payment terms different from those you requested. You have to do the work to compare. Also, you might have to track down quotes made by phone, fax or email in order to do the side-by-side comparison. You can spend a lot of time in the comparison process.

    To complicate matters, you might not always choose cost as your selection criteria. In the water heater example from the first blog in this series, perhaps all vendors have come in within your target price range, but one offers to deliver a week earlier for a small price premium. If speed is essential, this vendor’s overall quote might be the best. If the vendor quotes don’t follow the same format and you are interested in more than just the bottom-line price, it can be hard to compare all the details of the deal and focus on the aspects most important to you.

    Delivery and Payment

    You should have standard processes in place for inspecting and accepting the delivered items, accounting for the purchase, and paying the vendor. You need a system that keeps track of all purchase history including the products/services purchased, terms, supplier, and payments. Most small businesses keep different types of purchase information in different locations. For example, payments might be tracked in your accounting system, while supplier information might be stored in a paper file.

    Keeping the purchase history information is an important first step toward managing your supplier relationships, a topic covered in our next post in this series.

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