Why Small Business Fails in Social Media

We were curious as to why small businesses fail in social media. More fail from their attempt than succeed. At least, that’s what our research showed. And there is one leading reason; fear of commitment. We looked at 2,500 businesses in the U.S. and 1,500 in Canada that we considered small businesses (see our methodology below.) What we found was one overall reason businesses just plain flopped in social media engagement. Committment.

It’s a Huge Challenge
Any small business owners out there will probably agree; there’s just not enough time in a day to run the business and pay attention to all the added challenges of engaging in social media. There’s sales to keep the business open, then operating costs like payroll, rent, inventory or delivery of the service/product, taxes, accountants, client follow-ups and, well, so on.

Major Irony: It’s The Best Bang for your Buck.
While at the same time, the small businesses who do succeed with social media will tell you – it’s the most cost effective marketing tool. But patience and commitment is necessary. For a small business, social media provides two critical things to growth: 1) Trust building and 2) Evidence.

1. Trust: By using social media tools like LinkedIn, Facebook, FastPitch, Plaxo and so on, you can establish trust with prospective clients over time. You can show “who” you and your team are – short videos, photo’s of work done, video testimonials (from real people not fake “J. Jones, South Dakota” names that anyone with a keyboard can type in!) and links to referring clients.

2. Evidence: Proof of your work. References and images/video of jobs completed, innovations and helpful blogs and related content are all evidence that you are an expert, that you know your stuff.

The Reasons for Failure:

1. Commitment: This the piece on the pie graph above labeled as “time/commitment” – we analysed comments from small business owners in channels like LinkedIn, Facebook, Twitter and Identi.ca who made comments on why the found it difficult to find value in social media. In large part text analytics only goes so far and some human “coding” has to take place. We also looked at comments in blog posts and news media stories across primary news channels like the Globe & Mail and several U.S. state and localized news media sites. What it really came down to is that small business owners find it takes a long time to find a direct (perceived?) time to an ROI. Unfortunately, this is true. Expecting overnight success or even within a week or two, is unrealistic. This is true of marketing in general. We suspect that marketing/advertising in traditional channels would actually take twice as long.

2. Resources: The second most popular reason cited was available resources – i.e. the humans needed to engage. For a small business, every employee must have a direct and measurable impact on revenues. Small business owners, because they are small, often (and rightly) feel that if they hire an employee, that person must have a positive impact on revenues either through customer satisfaction or sales. It is a major stress point for a small business owner to hire someone. Unfortunately, as social media engagement can take time, many small business owners are (wrongly) tempted to think the required engagement time is a poor investment. This comes down to an equation of being able to carry such a marketing resource until the beginning of a return period. Sadly, what many small business owners also fail to realise is that it takes 6-9 months for a new sales person to become profitable to a company, yet for a lower cost overall, a social media resource can produce similar revenues. Economics here, are failing the small business owner.

3. Content: As many small business owners feel they must “control” all aspects of their business (this may be so until you reach employee number 2) they must control what happens and what is done. It is very hard for an entrepreneur to “let go” of certain aspects of their business because they are (rightly) very passionate about their business. But delegating and letting people do what they are good at it and then letting them do it is often the sign of entrepreneurs who win in the long run. This goes to producing the “content” needed in social media; from blog posts to quick videos.

4. Knowledge: This relates again to staff, but also to the small business owner. On the one hand we mean the “knowledge” of the entrepreneur of the tools that are available. On the other this relates to the entrepreneur feeling no employee can have as much knowledge about the business as they do. Again, that relates to a fear of letting people do what they are good at.

5. Assumptions: This was directly related to the assumptions that business owners make about social media because they don’t use it themselves and is incredibly dangerous. While it may rank as low for what entrepreneurs or small business owners say, it is incredibly important in and of itself. Small business owners will tend to think social media services are used by kids when they service an older demographic. This is potentially lethal and perhaps, the most damaging assumption a small business can make. It’s the +25 demographic that uses social media to talk about products and services more than youth. So much so that a small business may not even realize they’ve been targeted with negative social media.

So…what do you think about why small businesses fail with their social media engagement?