Yelp Poll: Small Businesses Bullish For 2016, Digital Tools To Foster Strong Growth
Most Small Businesses Predict Growth of Over 25% Next Year
SAN FRANCISCO, CA, December 16, 2015 / PRNewswire — Yelp Inc. (NYSE:YELP), the company that connects consumers with great local businesses, today released its first-annual Small Business Pulse Survey, finding that 85% of American small businesses active on Yelp expect their revenues to grow in 2016, estimating an increase of 26% growth in the year ahead.
This optimism prevailed throughout the survey, with young companies leading the charge and predicting 48% growth over the next year. The “can-do” spirit of American businesses extended across a wide variety of industries, from food service, health and medicine to retail and home services. Small businesses in the restaurant industry that are active on Yelp were most upbeat about 2016, with 92% of respondents expecting an overall revenue increase.
Small businesses are a growing demographic of overall business owners in the United States. Small businesses represent more than 99.7%1 of all employers accounting for 55% of all jobs and 54% of sales2 in the U.S.; and produce nearly half of non-farm private gross domestic product (GDP)3.
“Small businesses are an important part of the economy. They provide roughly half of all private sector jobs, and also provide direct benefits to the communities that get to enjoy their goods and services,” said Harvard University Professor of Business Administration and Yelp’s Economist in Residence, Michael Luca, an expert on how businesses influence local economies. “It’s interesting to peek into the minds of small business owners, to see how they’re feeling and what they’re thinking about. This group of businesses is clearly optimistic, which is consistent with relatively strong consumer sentiment and a recent uptick in retail sales.”
Unexpected Challenges Top of Mind
Despite this optimism, there is no shortage of challenges that small businesses confront. Yet, while media reports see small businesses worrying about health care costs and minimum wage compliance, Yelp’s survey shows that small businesses see developing competitive growth strategies as their greatest challenge.
Specifically, the top identified issues include attracting and retaining customers (60%), managing a limited marketing budget (32%) and competition from larger businesses (30%). Neither health care nor minimum wage concerns troubled small businesses as much as growing their customer bases and rising above competition. Only 18% of businesses identified time spent on non-core business elements as the main disadvantage of running a small business.
“Small businesses worry about their own ability to grow, even as they remain optimistic,” added Dr. Luca. “Health care and other concerns, while important, seem to be less of a problem for many small businesses as they prioritize growth.”
Digital Marketing Levels the Playing Field
As advances in technology continue to break down geographic, economic and social barriers, an online community – increasingly known as the “Feedback Economy” – has evolved and allows consumers to share opinions, rate businesses and connect with companies of all sizes. Businesses surveyed overwhelmingly felt that feedback economy platforms like Yelp are giving them the digital tools and confidence they need to engage with and attract new customers: 85% of small businesses believe digital marketing has helped their business grow its customer base, and 91% use digital marketing tools such as social media platforms (75%), consumer review platforms (48%) and search engine advertising (48%).
“It’s clear that the best local businesses value the feedback of their customers,” said Jeremy Stoppelman, CEO of Yelp. “Consumers now have the power to effortlessly share their opinions and experiences, which is a game-changer, helping savvy small business owners quickly improve and grow.”
The majority of small business owners agree that digital tools allow their companies to remain nimble and personal even as they scale rapidly. An impressive 79% of businesses surveyed believe that digital tools allow them to provide a more personal touch in their communities, enabling them to address the individual needs of their customers. Today’s feedback economy – where customer-business interactions are easier than ever – is becoming an even bigger resource in helping small businesses build relationships and improve customer service.
“There’s a misconception that only big companies have the capacity and resources to use sophisticated, high-tech marketing tools. Back when billboards and Super Bowl ads seemed like the only way to reach customers, small businesses were more constrained, but things have changed dramatically,” added Dr. Luca. “With an expanding set of tools to engage with customers, small businesses can leverage consumer feedback platforms to build higher-quality customer relationships.”
Political Concerns Mirror Those of Big Businesses, Nation As a Whole
Politically, small businesses share the same concerns as large businesses. The issue top of mind for small businesses surveyed is reducing the regulatory burden and simplifying the tax code, which could make the process of filing taxes faster and easier for small businesses. Small businesses – already facing a robust set of challenges to their growth and constant competition from rivals – support changes that would allow them to focus on these core issues and grow in 2016.
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The Yelp Small Business Survey was conducted using an email invitation and an online survey from November 17, 2015 to December 3, 2015. Yelp partnered with Wakefield Research, a leading national research firm, and polled 901 self-selected Yelp small business members in industries as diverse as food service, retail, health, medicine and home services about their needs in a changing economy. Results of any sample are subject to sampling variation. The magnitude of the variation is measurable and is affected by the number of interviews and the level of the percentages expressing the results. For the interviews conducted in this particular study, the chances are 95 in 100 that a survey result does not vary, plus or minus, by more than 3.3 percentage points from the result that would be obtained if interviews had been conducted with all persons in the universe represented by the sample.
Yelp Inc.(NYSE: YELP) connects people with great local businesses. Yelp was founded in San Francisco in July 2004. Since then, Yelp communities have taken root in major metros across 32 countries. By the end of Q3 2015, Yelpers had written approximately 90 million rich, local reviews, making Yelp the leading local guide for real word-of-mouth on everything from boutiques and mechanics to restaurants and dentists. Approximately 89 million unique visitors visited Yelp via their mobile device on a monthly average basis during Q3 2015**. Approximately 79 million unique visitors visited Yelp via their desktop on a monthly average basis during Q3 2015.
** Average monthly mobile unique visitors based on the number of unique visitors accessing Yelp via mobile web and unique devices accessing the app on a monthly average basis over a given three-month period.
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