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The Role of Technology in Determining Small Business Success

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

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

  3. The Small Business Success Index

  4. 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:

  5. SBSI Framework

  6. 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

  7. Examples of Index Components How successful is your organization in each activity?

  8. The SBSI Classifications

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

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

  11. Technology Deployed by Small Businesses and Its Impact on Success

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

  13. 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

  14. Small Businesses that Use More Internet Technologies are More Competitive

  15. Relationship Holds up for “Very Small” Businesses

  16. 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

  17. How Does Technology Help a Small Business Succeed?

  18. 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

  19. Technology Likely Drives Success by Supporting Marketing and Innovation

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

  21. 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

  22. Thank You!For more info:Charles Colbyccolby@rockresearch.com703-757-5213, x12