Small Businesses Unsure About Social Networks

A report from Discover Financial Services that surveyed the economic confidence among small business owners in the United States rose to its highest level in 14 months in April as more midmarket companies see the broader economy and the conditions for their own businesses improving.

The number of small business owners who say the economy is getting better nearly doubled to 31 percent, up from 16 percent in March and the highest level in category in two years.

The survey also measured the impact the Web and social networking sites are having on small to medium-size businesses (SMBs). When asked if they were a member of any online social networking community such as Facebook, LinkedIn, MySpace or Twitter, 38 percent of SMBs said yes, which is up from 22 percent who answered a similar question in October 2007.

When asked which networking opportunities they use most, 46 percent of small business owners identified traditional methods such as conferences, trade shows, local in-person groups or chambers of commerce—preferring handshakes to hyperlinks, as Discover classed it. Of the remaining respondents, 16 percent cited “other” networking opportunities, eight percent cited online sites, seven percent said e-mail, and 22 percent said they weren’t sure.

The Discover Small Business Watch, a monthly index of the economic confidence of the nation’s 22 million businesses with five or fewer employees, found 62 percent of small business owners still do not have Web sites for their businesses, although that is down from 65 percent in November 2007. Of those who currently belong to an online social network, only 45 percent use it to promote their businesses, though 40 percent of owners say they have used e-mail to promote their businesses.

In polling the amount of time SMBs are spending online at work, 42 percent say they spend three or more hours online each week related to their businesses, 29 percent are online less than an hour, 21 percent stay on for one to three hours, and five percent aren’t sure.

While the survey suggests many small business owners have not fully embraced the opportunities the Web and social networking may hold for their companies, SMBs are embracing the “glimmers of hope” sentiments about the economy. Of those polled, 32 percent of SMB owners see economic conditions for their businesses improving, up from 24 percent in March; while 40 percent see conditions getting worse, down seven percent from the previous month; 22 percent say the economy is staying the same. Six percent were not sure.

Discover’s Small Business Watch report also noted the monthly economic confidence index increased more than 10 points, rising to 88.5, up from 78.2 in March and the highest since the report reached 90.8 in February 2008. April’s mark represents the third consecutive monthly increase in economic confidence among small business owners.