A week ago today, a small business in my community called ‘Costume Capers’ closed its doors after 30 years of continuous operation in the coastal hamlet of San Luis Obispo. When the local Tribune asked partner-proprietors Debi and Keith why they were throwing in the towel, their answer came without equivocation: enterprise business moved into their market and internet shopping made them feel like it was impossible to compete. Their customers slowly drifted away and their revenue stream simply dried up.
Costume Capers was in the category of VSB or “Very Small Business,” that massive crosscut of ventures with fewer than five employees that constitute 85% of all businesses in the Western world. Like 61% of all VSBs, they were well established in their community (3- years-old is the typical success marker) and were women-led, like more than half of all business around the world. And like most small businesses who wear multiple hats, they struggled to keep up with technology adoption.
The unhappy fate of Costume Capers is not unique, but the real tragedy is that they felt like the tools they needed to compete—starting with an effective online presence—were still out of reach for them in 2015. They were far from alone in their predicament. In fact, 59% of very small businesses around the world still don’t have a website according to a new landmark study by RedShift Research that GoDaddy commissioned earlier this summer.
For those of us who work in tech, it’s hard to fathom that nearly six out of 10 small businesses are still not online after more than two decades of the Internet’s mainstream popularity. While a few utilize social media or listing sites to gain some semblance of Web presence, many very small businesses in the study said they felt too small, too non-technical and too limited in their budgets to have a site of their own. Those would have been valid concerns 10 (or even five) years ago, but today there’s simply no excuse.
Enterprise businesses learned long ago that the Internet was by far the most effective way to reach customers—globally or locally. With the meteoric rise of the mobile Web, that lesson has only become more important. In years past, the cost for a VSB to build a website that clearly drove sales was often more costly than the revenue gained by the effort. But as the cost of computing has radically dropped and as consumers have adopted the Internet as a primary means for making purchasing decisions, the true cost of not being online can be catastrophic.
According to a study done by Search Engine Land, 91% of consumers now use the Web to research their purchases and 85% now use the Web to find local businesses. Without an online presence, eight or nine out of every 10 potential customers will never even know a small business existed. They are effectively invisible.
59% of very small businesses around the world still don’t have a website. Today they are effectively invisible.
Today, all very small businesses need an effective, mobile friendly website, a solid social and listing presence and a clear plan for communicating with their customers online. With DIY site builders from companies like GoDaddy’s (and many others from our competition), anyone can build a compelling website for just a few dollars. And with the rise of cloud computing, small businesses can get a professional email, marketing tools and even bookkeeping tools for very little money.
The good news for micro-businesses around the world is that their fears about getting online are quickly eroding. According to RedShift, over half of the businesses that took part in their study said they intend to get their business online within the next two years. They also expect that having their own online presence will significantly speed growth by making their businesses visible to local, national and international audiences. Nearly half believe that their business will grow 25% or more over the next 3-5 years with the help of Internet and mobile devices. That figure is consistent with what VSBs who are already online have reported about the Web’s impact on their business, with 59% saying their business grew noticeably once they had built their website.
Given that there are roughly 200 million VSBs globally, their getting online effectively could have a major impact on small business growth as a percentage of the economy. However, there are still some notable distinctions about who is ready to take the plunge. Newer small businesses were nearly twice as likely to want a website compared to their older counterparts and firms with at least one employee (vs sole-proprietors) were farther along in their plans. Getting all 200 million VSBs online will definitely take some time, but it’s a worthy goal.
For anyone keeping a close eye on the very small business market as it relates to the global economy, the RedShift study (the full report can be found here) provides some unique insights and is definitely worth a read.
Though it’s unfortunately too late for Costume Capers, it’s not too late for Debi and Keith in their next venture—and I’m sure there will be a next one. The Internet has given enterprise business a big head start, but it is also a strong force in leveling playing fields. Small, local business have a powerful advantage over enterprise: their ability to provide personalized (and highly personal) service. If they can just be found online, communicate their unique value to an on-the-go audience and maintain relationships in a way modern consumers want, the world can be theirs.
Though VSBs clearly have a long way to go, the RedShift study give me a lot of hope for the future of the small, the unique, and the highly-personal over the big box experiences of past decades.
Of course GoDaddy is here to help as you’d expect, but we’re increasingly not alone in our quest — there are a ton of others who can fuel this tipping point. Very small businesses out there, pick up your laptops and let’s change the world for the better. Your time has come.
Photo by: C’Est Demode