State of Small Business Research Report – June 2011


This market research report was conducted on June 1st, 2011 by based on a survey of 10,000 small business owners.

This market research report is broken into three sections which focus on:

The State of the Small Business Economy
   • Decrease in lending to small businesses from Q1 2009 to Q4 2010
   • Increase in Unemployment from 2008 to 2011: Location Based Analysis
   • Bankruptcy Trends – June 2008 to May 2010

Small Businesses on the Web
   • Internet Marketing Trends: Website, Email Marketing, Social Media 2010 vs. 2011
   • Social Marketing Tactics 2010 vs. 2011
   • Impact of Social Media Marketing

Keys to Success in the New Economy
   • Effective cash flow management
   • Leverage consultants and outsourcing
   • Leverage social and viral web
   • Use social and mobile
   • Establish trust with customers

While small businesses are losing confidence in the face of a weakening economy and massive debt, there remains a silver lining thanks to opportunities afforded by the Internet. Businesses can start and thrive at an extremely low relative cost despite the economy through Internet Marketing, with specific emphasis on social marketing. With 71% of adults shopping online and a 27% increase of online sales in Q1 2011, small business owners are looking to the web in lieu of a dismal job market.

The State of the Small Business Economy

Small Business Lending Drops 50% from 2010

Bank lending to small businesses fell $15 billion in the first quarter of 2011. This decline comes with little surprise as the last three quarters have shown a similar drop. Lending reached its peak in 2008 and has consistently slid ever since. Bank regulations have tightened post-recession, with many of the nation’s most prominent banks refusing loans for small businesses. Loans by lenders with over $50 billion or more in assets decreased a total of 4.9% in Q1 2011.

Unemployment Jumps Between 2008 and 2011

Unemployment grew to 9.1% in May, increasing from the previous four months and representing even more concern over the current job market. Small businesses remain hard-pressed to hire, with one particular report stating that 42% of businesses were forced to hire fewer employees than they actually needed. With 8.5 million jobs lost throughout 2008/9 alone, the days of a 4.4% unemployment rate such as those during the summer prior to the recession are all but lost. Businesses are left unable to hire due to the recession, yet without job creation the economy is unable to thrive.

“In May, the number of long-term unemployed (those jobless for 27 weeks and over) increased by 361,000 to 6.2 million; their share of unemployment increased to 45.1 percent.” –U.S. Department of Labor, The Employment Situation, May 2011

Bankruptcy Trends June 2008 to May 2010

Bankruptcy reached its peak between Q2 and Q3 2009, with a steady rise since the beginning of 2006. The decline of 2010, specifically in from Q3 to Q4, perhaps represents a period of stabilization with an 18% decrease from the previous year. This period represents bankruptcy levels mirroring that of Q1 and Q2 2005.

“While a number of factors could impact this trend over the next year, recent developments suggest that the landscape for small businesses will be more stable in the future.” – Dr. Barazesh, senior vice president, Equifax Commercial Information Solutions

Small Businesses on the Web

Internet Marketing Trends: Website, Email Marketing, Social Media 2010 vs. 2011

Marketing strategies have seen a large shift from 2010 to this year, with tactics becoming increasingly social.  If you don’t have a website, aren’t collecting and remarketing to customer emails, don’t have your business listed in popular local directories and don’t have a Facebook page, you’re falling behind the curve. New services allow for monitoring of your business’ online reputation, including notifications of when customers rate or review your business on sites like Yelp and Citysearch.  

In addition to upping search marketing volume, small businesses are doubling their efforts in terms of blogging, video marketing and other means of social media marketing. Additionally, businesses are looking to deal sites such as Groupon for greater exposure in local markets.

Impact of Social Marketing

With such great interest in social sites like Facebook and Twitter, businesses have a variety of reasons to be using social media for marketing purposes. The most common of those reasons being to generate greater exposure for one’s business, with the desire to increase customers. Businesses and marketers both are becoming more and more aware of the importance of a how a presence in social media can help with search engine rankings.  Google has already indicated that this will become a large factor in where your business ranks in search results.  With over 75% of all Americans participating in Social Media, popular social media sites are the new frontier for businesses looking to attract new business.

As social media is about interaction, viral marketing activities are showing tremendous traction on sites like Facebook and Twitter and helping to establish trust, which ultimately leads to increased sales. 

Businesses participating in sweepstakes or contests online are seeing reductions in customer acquisition costs of up to 50%.  By allowing customers greater insight into your business through your Facebook Fan page or Tweets (messages on Twitter), some businesses are seeing as much as a 200% to 300% lift in customer lifetime value from return purchasers.

Social Media Marketing Difficulty Vs. Effectiveness

Social media marketing efforts have proven to yield significant results.  It’s been reported that businesses that embrace blogging receive 50% more web traffic than those that don’t, with 75% of businesses upping the use of their blogs this year. The challenge, of course, is that deep, personal marketing communications often need to come from the business owner or internal resources, not an outsourced firm.  Sharing content, deals and videos through sites like Facebook have some of the highest difficulty to effectiveness yields, with little time and technology know how required.  Blogging has also proven to be highly effective, yet does require some time to develop content.  Advertising on social media sites like Facebook provides for high-target marketing with measurable results.  Often times utilizing a consultant will help reduce the time burden on the business.  Other activities like blogger outreach, getting involved in moderating social conversations, and using social media as a means to improve your search engine rankings do produce results but require more time than may be available to the average business owner.


While email marketing in general, in particular customer email acquisition and management has proven to be extraordinarily effective, social marketing through email has proven to be less effective.  It seems that the one-on-one aspect of social media is limited to the social media environment, while email marketing and communications are ideal for offers, deals and specials. 


The historical way of doing business is converging with technology and the Internet and what we are seeing today is a transition.  The transition will afford tremendous opportunities for some businesses, and will put others out of business.  Businesses that operate efficiently with low overhead and low cash flow constraint will prosper in the new economy while businesses that don’t adapt to this new environment will be unable to borrow, acquire the human resources they need, and may ultimately fail.

Keys to Success in the New Economy:
•   Effective cash flow management - build a business that doesn’t need to borrow
•   Leverage consultants and outsourcing - maintain low costs but stay connected to remote resources
•   Leverage social and viral web – good businesses get talked about, only the best will thrive
•   Use social and mobile – stay connected with customers to lower acquisition costs and increase value
•   Establish trust with customers – the web brings new choices to customers and trust trumps all else.

Small businesses are undoubtedly facing immense challenges in the face of the economy. For some businesses this challenge will become a tremendous opportunity to not only survive, but thrive.

For questions regarding Small Business Market Research Reports, please email us at

About the Author

Brent Barnhart
Brent Barnhart is a regular contributor to He covers a wide variety of topics through the written word, including content marketing, Internet marketing and small business trends. is dedicated to helping small businesses grow their presence on the web and facilitates connectivity between local businesses and more than 7,000 Chambers of Commerce worldwide.
comments powered by Disqus