Economy Weighs on SMBs, According to Sentiment Survey Released by Local Corporation
Local Corporation (NASDAQ: LOCM), a leading online local media company, today reported findings from its first ever Small Business Sentiment Survey. The survey was commissioned to help understand the current sentiment of small business owners as it relates to the economy, the future and their businesses.
Conducted last month by Kelton, a global insights and research firm, the survey polled over 400 small business owners and found:
- 92 percent of small business owners report that their financial decisions are influenced by the economy
- 46 percent of respondents would be more confident about their business' future if their personal income taxes were lowered, and 37 percent would feel this way if there was a change in administration
The survey indicates that small business confidence levels may correlate to whether business owners are hiring or cutting spending. In response to the shaky economy in the last three years, 46 percent of small business owners have considered raising prices, 40 percent have thought about cutting back on marketing spend and 24 percent have considered reducing staff. Importantly, 61 percent of business owners admit they would be willing to take a pay cut themselves to ensure that their own business doesn't close prematurely.
Additionally, in the past three years, business owners have considered:
- Reducing operating costs (51 percent)
- Reducing operating hours (19 percent)
- Reducing benefits (16 percent) or salaries (16 percent)
- Closing temporarily (11 percent) or permanently (16 percent)
As small business owners are conserving budgets, they're also seeking additional value from their advertising spend, which is driving a $5 billion decline in traditional media spend from 2010-2015, offset fully by an $18 billion increase in digital media spend during that same period1. To capitalize on that growth, Local Corporation has released a full service digital media solution for small businesses to help them reach online consumers: http://launch.local.com.
“Small business is a major growth engine for our economy. We can interpret from these results that when small business owners are not confident about the economy, they look more closely at their expenditures and where they're getting the most value for their money,” said Heath Clarke, chairman and CEO, Local Corporation. “Based on digital media growth projections, small businesses clearly see the value in moving their dollars from traditional to digital media, which is why we've focused our development efforts in this area.”
More than half (63 percent) of respondents are currently investing in digital marketing, and 30 percent are planning to increase their digital marketing spend in 2013. Additionally, more than half (53 percent) of respondents believe that a website or a better version of their current website is the digital marketing solution that might most help them reach consumers.
More than half (56 percent) of participants are willing to make a long-term investment in their business right now, with business development (46 percent) and online advertising (37 percent) topping this list. More than a quarter (26 percent) of respondents also reflect that customer relationship management has been their biggest marketing challenge in the last 12 months.
About Local Corporation
Local Corporation (NASDAQ: LOCM) is a leading online local media company that connects brick-and-mortar businesses with over a million online and mobile consumers each day using a variety of innovative digital marketing products. To advertise, or for more information, visit: http://www.localcorporation.com.
Kelton is a leading global insights firm serving as a partner to more than 100 of the Fortune 500 and thousands of smaller companies and organizations. Utilizing a wide range of customized, innovative research techniques and staff expertise in marketing, branding, PR, media, and business strategy; Kelton helps drive our clients' businesses forward.
About The Survey
The Local Corporation Survey was conducted between October 12 and October 18, 2012, using an email invitation and an online survey among 403 small business owners who make at least some financial decisions related to marketing and work at companies with 25 employees or less, have annual revenues of less than $1.5 million, are not franchises or branches of national companies, spend $75,000 or less every year on marketing or advertising, and some that have home-based businesses.
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.
In this particular study, the chances are 95 in 100 that a survey result does not vary, plus or minus, by more than 4.9 percentage points from the result that would be obtained if interviews had been conducted with all persons in the universe represented by the sample. The margin of error for any subgroups will be slightly higher.
Forward Looking Statements
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