Decision Analyst

Web Presence Of Small Businesses Study

By: Joel Mincey

December 19, 2008

Executive Summary Report

2

Methodology

Survey Methodology 600 small business owners responded to the online survey, which was commissioned by Elance and Microsoft and conducted by independent research firm Decision Analyst, Inc. of Arlington, Texas between December 10-16, 2008. The survey's margin of error is plus or minus four percentage points at the 95% confidence level. Data were weighted to be representative of national U.S. small business owners.

3

Key Findings

A majority of small business owners do not have a presence on the web – this despite the fact that 43% indicate that having a web presence is extremely or very important to the success of their business, and 71% say they use email and/or online advertising to market their business.Money, time and expertise are the key barriers to having a presence on the web - 60% spent less than $500 on their websites in 2008.Most small business owners would rather do something other than web design – 64% of small business owners would prefer to do something else (tax return, speech, run a 10K race).Web design/consulting is one area where small business owners would look for freelance consulting help – marketing is the second area.Most small business owners would try and design the site themselves, or ask a friend for help - nearly 20% would search online for a consultant to help them in web design.

4

Key Findings

A majority of small business owners do not have a presence on the web – this despite the fact that 43% indicate that having a web presence is extremely or very important to the success of their business, and 71% say they use email and/or online advertising to market their business.Money, time and expertise are the key barriers to having a presence on the web - 60% spent less than $500 on their websites in 2008.Most small business owners would rather do something other than web design – 64% of small business owners would prefer to do something else (tax return, speech, run a 10K race).Web design/consulting is one area where small business owners would look for freelance consulting help – marketing is the second area.Most small business owners would try and design the site themselves, or ask a friend for help - nearly 20% would search online for a consultant to help them in web design.

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Key Findings - continued

The spirit of entrepreneurship is alive and well – nearly 90% indicate that despite the economic downturn, they would still prefer to start their own business rather than work for someone else.Small business owners are positive about 2009 - 40% indicate they have a positive outlook for their business in 2009.They will maintain current levels of staffing – 76% of small business owners said they would maintain their current levels of staffing throughout 2009.The key priority for them is profitability - 67% of small business owners say that profitability is the most important priority for them in 2009.Small business owners are self-reliant - when asked which if any business leader they would hire, nearly a third said “no one”. Small businesses are in-fact “small” and “young” – 82% of small business owners have five or fewer employees, and have been in business for ten years or less.

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Marketing Plans For 2009

Budget remains unchanged

40%

Plan to spend less39%

Plan to spend more21%

Question: “Has the current economic crisis impacted your marketing plans for 2009?”Base: Total Respondents (605)Source: Online Topline Data

61% of small business owners say they will spend the same, or more on marketing in 2009

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Business Aspects That Could Benefit From Freelance Help

11%

7%

25%

28%

29%

0% 20% 40% 60% 80% 100%

Marketing

Web design

Sales

IT (computer networks,etc.)

Other

Question: “What is the one aspect of your business that you think could benefit most from freelance help?”Base: Total Respondents (605)Source: Online Topline Data

Marketing, web design and sales are all areas where small business owners feel they could benefit from freelance consulting help.

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Services Most Likely To Employ A Freelance Consultant

15%

13%

10%

4%

16%

17%

24%

35%

38%

0% 20% 40% 60% 80% 100%

Web design

Marketing

Sales

Accounting

Legal

IT (computer networks, etc.)

Technical work

Other

None of these

Question: “For what type of services would you be most likely to employ a freelance consultant?”Base: Total Respondents (605)Source: Online Topline Data

The same three areas: web design, marketing and sales are also the areas where small business owners are likely to employ a freelance consultant.

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Marketing Business’s Services

16%

30%

18%

22%

34%

37%

37%

0% 20% 40% 60% 80% 100%

Email

Flyers

Online advertising

Yellow Pages

Coupons

Other

I am not marketing mybusiness

Question: “How are you marketing yourself or your business’s services during this economic crisis?”Base: Total Respondents (605)Source: Online Topline Data

Small business owners tend to use email, flyers, and online advertising as the primary means of marketing their services.

10

Small Business Currently Have A Website

No52%

Yes48%

Question: “Does your small business currently have a website?” Base: Total Respondents (605)Source: Online Topline Data

Slightly more than half of the small business owners interviewed indicated that they did not have a website for their business.

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Reasons Business Has A Website

38%

28%

5%

1%

42%

61%

66%

85%

0% 20% 40% 60% 80% 100%

I want customers or potential customers to be able tofind information about my company online

To project a professional face with the online public

It is cost-effective marketing for my company

I sell or would like sell products online

It instantly gives me a global presence

So that my business looks bigger than it actually is

Other

No specific reason

Question: “Why does your business have a website?”Base: Respondents With Website (289)Source: Online Topline Data

Providing a source of information to potential customers is the primary reason among small business owners for having a website.

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Reasons Business Does Not Have A Website

25%

12%

27%

29%

30%

31%

0% 20% 40%

I don't need to have a website because I don't sell online

It's too expensive to hire someone to create a website forme

I don't know how to create a website myself

I would like to have a website for my business but just don'thave the time to investigate options for getting one

I don't believe my customers would look for my businessonline

Other

Question: “Why doesn’t your business have a website?”Base: Respondents Without Website (316)Source: Online Topline Data

For those business owners that do not have a website, the primary reasons are: lack of need, lack of money, lack of expertise, and lack of time.

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Website Design And Support

11%

7%

13%

19%

24%

26%

0% 20% 40%

I could try to do it myself

I would ask a friend for help

I would search online for a Web designer or service

I already have an IT technical support person

I don't know where to turn, I would need help

I would search my local newspaper, or the YellowPages to find someone

Question: “To whom would you turn for website design and support?”Base: Total Respondents (605)Source: Online Topline Data

Most small business owners indicate they would try and design a website themselves, or ask a friend for support. However, nearly one in five would look online for a Web designer or service.

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Importance Of A Website Or Online Presence

11%

6%

5%

11%

25%

18%

25%

0% 20% 40%

Extremely important

Very important

Somewhat important

Not very important

Not at all important

It isn't important now, butwill be in the future

Don't know

Question: “How important is having a website or online presence to the success of your small business?”Base: Total Respondents (605)Source: Online Topline Data

Nearly half (43%) of small business owners feel that an online presence is extremely or very important to the success of their small business.

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Cost Of Website In 2008

4%

9%

10%

18%

59%

0% 20% 40% 60% 80% 100%

Less than $500

$500 - $999

$1,000 - $1,999

$2,000 - $4,999

$5,000 or more

Question: “Approximately how much did you spend on your website in 2008?”Base: Respondents With Website (289)Source: Online Topline Data

Among the small businesses that had a website, nearly 60% spent less than $500 on their website in 2008, a little under 15% spent $2000 of more.

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Biggest Barrier To Website Update Or Set-Up

10%

3%

21%

24%

42%

0% 20% 40% 60%

Money

Time

Technical expertise

People

Don't know where to start

Question: “If you are considering updating your website/setting up a website, what is the biggest barrier to getting it done?”Base: Total Respondents (605)Source: Online Topline Data

Clearly, the greatest barrier to having a website for a small business is cost. This was followed by time and expertise.

17

Staffing Or Hiring Changes Due To The Economy

24%

53%

5%

6%

4%

7%

0% 20% 40% 60% 80% 100%

Reduce my full-time staff immediately

Reduce my full-time staff within the next 3-6 months

Plan to increase my full-time staff

Plan to hire consultants/freelancers to help

Sole proprietor; however, may need to hireconsultants/freelancers

I will neither hire nor fire/lay-off any staff

Question: “How, if at all, are you changing your staffing/hiring due to the economy?”Base: Total Respondents (605)Source: Online Topline Data

In terms of dealing with the current economic crisis, most small business owners (53%) indicate they will maintain their current levels of staffing.

Nearly a quarter are sole proprietors, who may hire consultants for help in 2009.

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Importance Of Business Priorities

58%

3%

7%

22%

39%

28%

7%

20%

44%

21%

9%

23%

48%

19%

6%

4%

67%

22%

6%

4%29%

9%

3%

1%

2%

Profitability

Dealing with risingcosts of overhead

Wearing many hats dueto staffing cuts

Paying for current full-time staff, may have to

lay-off employees

Hiring new full-timestaff

Least Important Priority Most Important Priority

Question: “Please rank the following priorities for your business in 2009 in order of importance from highest to lowest, using a scale from 1 to 5. Please select a “1” for the “most important priority” and a “5” for the “least important priority.”

Base: Total Respondents (605)Source: Online Topline Data

Profitability is the overwhelming priority for small business owners in 2009.

19

Number Of Employees

16+ Employees4%

11-15 Employees4%

6-10 Employees9%

1-5 Employees82%

Question: “How many full-time employees do you have?”Base: Total Respondents (605)Source: Online Topline Data

The vast majority (82%) of small business owners interviewed have less than six employees.

20

Employee Benefits

My employees don't receive benefits from

my company61%

No31%

Yes8%

Question: “With the current economic atmosphere, have you had to decrease your employee benefits package or amount of coverage to lower your overall costs?”Base: Total Respondents (605)Source: Online Topline Data

Nearly two-thirds of small business owners do not provide benefits to their employees.

21

Years Of Owning Or Operating Business

6%

14%

12%

23%

39%

6%

0% 20% 40% 60%

Less than 1 year

1 - 5 years

6 - 10 years

11 - 15 years

16 - 20 years

More than 20 years

Question: “How many years have you owned or operated your business?”Base: Total Respondents (605)Source: Online Topline Data

Nearly 70% of small business owners have been in business for 10 years or less.

In contrast, nearly 15% have been in business for more than 20 years.

22

Employees Expected By Year End 2009

Same as I do now76%

Less full-time staff10%

More full-time staff14%

Question: “At the end of 2009, do you expect to have…?”Base: Total Respondents (605)Source: Online Topline Data

Three quarters of small business owners indicate that they will maintain their current staffing levels in 2009.

23

Challenges Of The Economy

Start my own business

86%

Work for someone else14%

Question: “Given the challenges facing the economy and your experience as a business owner, if you had the opportunity again, would you still start your own business or would you choose to work for someone else?

Base: Total Respondents (605)Source: Online Topline Data

Despite the challenging economic situation, nearly 90% of small business owners say they would start their own business again, rather than work for someone else.

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Economic Outlook For The Year Ahead

4%

37%

19%

40%

0% 20% 40% 60%

Positive outlook

It will be similar to 2008

Worried, but believe mybusiness will make it

through the year

My business is not likely tomake it through the year

Question: “As a small business owner, what is your economic outlook for the year ahead?”Base: Total Respondents (605)Source: Online Topline Data

Small business owners are optimistic for the most part, with 40% saying they have a positive economic outlook for 2009.

Less than 5% believe their business will not survive the current recession.

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Successful Business Person To Help You

5%

2%

28%

9%

13%

20%

24%

0% 20% 40%

Warren Buffett

Donald Trump

Oprah Winfrey

Richard Branson

Jack Welch

Jeff Bezos

None of the above

Question: “If you could hire one successful business person to help with your small business for one week, who would it be?”Base: Total Respondents (605)Source: Online Topline Data

While nearly a third of small business owners indicated they would not hire any of the business leaders mentioned, 24% said they would hire Warren Buffett and 20% said they would hire Donald Trump for business help.

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Preferred Activities

42%

14%

18%

23%

21%

24%

18%

18%

22%

25%

17%

25%

30%

16%

19%

10%

36%

21%

19%

17%18%

20%

14%

7%

7%

Build your business'swebsite on your own

Prepare your own taxreturn

Give up caffeine oralcohol for a month

Give a speech to 100people

Run a 10K race

Least Preferred Activity Most Preferred Activity

Question: “Please rank the following activities in order of preference from highest to lowest, using a scale from 1 to 5. Please select a “1” for the “most preferred activity” and a “5” for the “least preferred activity.”

Base: Total Respondents (605)Source: Online Topline Data

While 36% of small business owners would prefer to design their own website, 64% would prefer to do something else, including prepare a tax return, give a speech, or run a 10K race.