Alf's Articles
Small Business Rules
by Alf Nucifora
Anecdotal evidence suggests that small business is big business; that it's the quiet turbine that drives the US economy; that creates the jobs; that spurs innovative business thinking and entrepreneurial risk. But, it's always a battle to pin down the real numbers or truly divine the attitudinal make-up of today's average small business person. Until now.
The Small Business Buying Power Study
From The NETWORK of City Business Journals comes a groundbreaking report on the buying power and behavior of American small business. Entitled "The Changing Landscape of Small Business" this 700-participant study, made up of small businesses (1-99 full-time employees) drawn at random from Dun & Bradstreet's database, was fielded in the May-July 2000. What follows are a selection of choice pickings from that study:
- 7.4 million small businesses in the US today (up 28% since 1995)
- Average of 6.1 employees per firm (down 27% since 1995)
- Average sales per employee…$279,000 (up 36% in the last 5 years)
- The service sector leads…
- Retail trade 27%
- Business and professional services, including healthcare, 17%
- Other services 21%
- Manufacturing 10%
- Construction 7%
- Finance, Insurance and Real Estate 6%
- Wholesale trade 6%
- Miscellaneous 6%
- 92% have experienced growth in the last three years with 52% growing at a rate of 10% per year or better
- The vast majority (70%) derive a 100% of their revenue from their local region or market (22% from national; 8% from international)
- Profiling the average small business and its owner…
- Average annual sales…$1.7 million
- Average years in operation…17.6
- Average age of the top executive…49.3 years
- Average annual household income…$222,600
- 40% women-owned
- 9% minority-owned
- 26% are home-based
- 74% are company founders
- 42% are college graduates
- Small business spending on B2B products and services topped $1 trillion in 1999
- Average spending on B2B services was $142,783 per firm
- Real Estate…$32,085
- Insurance…$27,307
- Marketing…$18,706
- Office supplies/services…$11,674
- Computer/Internet…$11,407
- Other capital spending…$11,061
- Telecom…$10,399
- Professional services…$9,089
- Employment services and training…$7,755
- Travel…$3,300
- Small business Internet usage has doubled in the past year (39% to 82%)
- Small business Broadband access (DSL, ISDN, T-1, T-3, Cable modem) has doubled in the last year to 40%
- What do small businesses use the Internet for?
- Search for info about products…84%
- Search for/read news…81%
- Obtain tech support from vendors…62%
- Look for/obtain business advice…61%
- Use computers remotely…46%
- Bank electronically…31%
- Chat with other business people…28%
- Make phone calls…19%
- 51% of all small businesses have made at least one on-line purchase in the last twelve months (up from 21% the year before)
- What are small businesses buying on-line?
- Travel…62%
- Computer software…44%
- Office supplies…42%
- Computer hardware/peripherals…38%
- Financial services…37%
- Books…32%
- Office equipment (ex computers)…20%
- Raw materials…14%
- Association memberships…12%
- Telecom equipment and services…10%
- Stamps…9%
- Subscriptions…9%
- Executive gifts…9%
- Professional services…6%
- Automobiles/Trucks…4%
- Insurance…2%
- 35% of small businesses have web sites (up from 15% the year before)
- What employee benefits do small businesses offer?
- Health insurance…60%
- Prescription medicine plan…34%
- Retirement/Pension plan…27%
- Dental insurance…15%
- Cafeteria benefits plan…10%
- Vision coverage…9%
- Stock option plan…6%
- Who is the primary decision maker?
- In companies with 1-5 employees, 40% of all purchase decisions are made by the principal; in 32% of the decisions, others provide advice but the principal makes the decision; 23% of decisions are made jointly
- In companies with 6-19 employees, the principal makes the sole decision (25%); the principal makes the final decision based on input from others (35%); and makes the decision jointly (35%)
- In companies with 20 or more employees, sole decision…17%; with advice…35%; jointly…41%
- What are the top small business concerns?
- Workforce issues…34%
- Cost-related concerns…17%
- Generating sales…16%
- Competition…11%
- Cash flow and collections…11%
- Government-related problems…9%
- Interest Rates/The Economy…6%
- Keeping up with technology…5%
- Management style, concerns, traits and values:
- "I believe in reinvesting the profits we earn back into my company"…85%
- "When making major decisions about my business, I give serious consideration to what other people in my company have to say"…82%
- "I tend not to use professional advisors and outside consultants to help me make important business decisions"…59%
- "I'd rather keep my company's debt to a minimum even if it means growing at a slower rate"…79%
- "It's not what you do, but how you do it that counts most to me"…91%
- "I'm excited by the challenge of doing something that no one else has done before"…72%
- "Fame, fortune and security are less important to me than doing what I enjoy (80%)…and having my fate in my own hands" (88%)
- "I prefer to separate my business life from my personal life (56%)…but in reality they are closely intertwined" (79%)
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