More SMB Outlook Data from Amex

Recently American Express conducted a study that showed the economic crisis taking its toll on small business owners and their outlook. The company just sponsored another online survey of 602 small business owners/managers of companies with fewer than 100 employees (conducted 10/6-10/7) to measure the shift in attitudes and behaviors based on a deteriorating situation.

Here are some of the results:

There’s a palpable gloom in these survey findings. And even though the sample was relatively small (n=602) I’m certain these responses are fairly representative of the mood and experience among US SMBs right now.

In my mind the key findings are:

  • More than three-fourths (79%) of respondents are seeing sales decrease
  • More than half (52%) are “cutting back or delaying marketing initiatives”
  • 62% expect the economy to negatively impact them (44%) or force them out of business entirely (18%)

These circumstances could combine to cause SMBs cut out more costly marketing initiatives (e.g., traditional media in favor of online) or it could reinforce the inertia of what they’re currently doing (traditional media) and cause them to hold off on unproven “experiments” like online.

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13 Responses to “More SMB Outlook Data from Amex”

  1. Will Scott Says:

    Hey Greg,

    To me these data suggest an opening for a good value story in online marketing.

    The traditional media are costly and require uncomfortable time commitments in times of uncertainty.

    If I can sign up for an online marketing program with verifiable results and a short term contract (or at worst performance-based early out) why wouldn’t I do that instead of signing a year-long contract for yellow pages advertising.

    Quick story: I was talking to a small business yellow pages advertiser who was complaining that they couldn’t get into the online without a print spend…

    … they canceled it all.

    Will

  2. Greg Sterling Says:

    Clearly the opportunity is there.

  3. Stever Says:

    Small businesses that are worried right now are a hard sell for search marketing, particularly if they’ve not gone that route yet.

    Many were a hard sell to begin with as they don’t quite understand it, they get inundated by offers from the big 3rd party PPC sellers (those that offer marginal results anyways), or they tried Adwords on their own and failed, and maybe they had a basic website for years now and have seen no sales from it (of course it’s not a search friendly website but in their mind the internet does not work based on their past results).

    We in the search industry know the types of returns we can offer and know the opportunity is there during these tough times but our job just got much harder when it comes to convincing potential new clients.

  4. Greg Sterling Says:

    I think this is exactly correct. In the abstract online should be an easy sell — accountability and all — however in practice I think it’s challenging, as you suggest.

  5. Allan Says:

    Wow – seeing small business owners having to resort to tapping personal assets to pay business expenses is painful. It’s still too early in this recessionary environment to be tapping personal wealth. There is still a lot of pain and financial unwinding to take place and the pressures to tap personal wealth could get stronger.

  6. Rich Rosen Says:

    One interesting point is the response to: “over the next six months, I see the economy improving and expanding opportunities for my business.” Oct is basically flat from Aug, and up from March. These responses do not map to the other responses in the section, but it may show that the survey sample feels better about about April ’09. That’s hopeful.

  7. Greg Sterling Says:

    Hope so.

  8. PaulSweeney Says:

    Dare I say a lot of this has to do with being able to manage cash flow, and of being able to put some level of predictability onto cash flow estimates. The banks are not there to give that extra 10 foot of funding, if you hit the rocks in this environment you are going to sink. You could be a good to great little business but “cash vulnerable” businesses should try to get proactive on this issue. Also, and I am just speculating here, are SME’s more likely to spend on savings than on prospecting? i.e. I will spend $100 to save $400, but I may not spend $100 to make $400? I know that held true for IT spending.

  9. Greg Sterling Says:

    One interesting question is whether it makes SMBs value “fixed-fee pricing” even more because of its predictability?

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