Regardless of where you start your small business, there's a general feeling of optimism, but many challenges serve as a roadblock for new entrepreneurs, according to a newly released report by Salesforce.
Released yesterday, Salesforce's Third Edition Small & Medium Business Trends Report surveyed more than 2,011 small and medium business owners in North America, Europe and Asia between Feb. 11 and March 7, 2019. Salesforce officials said the annual report explores "the challenges and goals of SMB executives, analyzes how demographics shape the SMB experience, and covers the role of technology in satisfying customer expectations."
Back to the start
Starting and operating a small business is an incredibly important part of most economies. In America, small business hiring made up nearly 62% of all new jobs from the first quarter of 1993 to the third quarter of 2016, according to the Small Business Administration's Office of Advocacy. On a global scale, the 2016 World Trade Report states that SMBs represent "more than 90% of the business population, 60% to 70% of employment, and 55% of GDP in developed economies."
But why do people start their own businesses, often at great personal and financial risk? According to Salesforce, the most common reason offered by entrepreneurs was to become their own boss (55%). Other reasons included the ability to create their own work schedule (36%) and that an opportunity simply presented itself (36%).
Conversely, the biggest constraints that respondents said they experienced when trying to get their small businesses off the ground was the search for good talent (60%), money concerns (59%) and insufficient time (58%).
Though money problems and insufficient time may be less of an issue for older entrepreneurs, Salesforce found that millennials and Gen Zers were 183% more likely to start a side business than their traditionalist and baby boomer counterparts. The younger generations were also 50% more likely to be passionate about a small business idea.
Younger entrepreneurs may be more driven to get started on a business venture because of the hardships they faced working for others. According to the survey, both millennials and Gen Zers were 170% more likely to have experienced a hostile work environment, and 73% were more likely to have lacked advancement opportunities from their previous employers.
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Current challenges and future hopes
Running a small business comes with its own set of challenges and disadvantages. According to the Salesforce survey, small and medium business owners say cash flow remains the biggest concern for them.
Approximately 53% of SMB owners said they felt they were at a competitive disadvantage against enterprises in their market when it came to meeting customer expectations over the next two years. Retail businesses, for example, point to the fact that the Amazons and Walmarts of the world are dominating customers' spending habits with lower prices.
Other challenges for growth over the next two years included maintaining financial growth (68%), meeting customer experience expectations (58%), and hiring and retaining the right employees (55%).
Even though respondents said they had concerns about their own growth, 78% said they were still optimistic about the future of their business. When asked how they see the near future going for their ventures, 60% of respondents said they planned to grow their business, while 36% said they aimed to stay at their current level. Only 4% said they planned to shrink their operations.
New technologies are constantly making their way into the business world. How fast they spread, according to researchers, depends on a number of factors. Some of the barriers for adoption, respondents said, were budget constraints (68%), not enough usage to justify the cost (61%), and difficulty implementing and training employees on its use (59%).
When it comes to spending money on new tech, 31% of respondents said customer relationship management systems were a top priority. Financial software was also a top priority (31%), as was hardware (28%). Business owners also reported looking to tech to attract new customers. Social media (46%) and email marketing (38%) were tops in this aspect, with campaign management also a major tech spend (22%).
In business tech circles, one of the hottest topics is artificial intelligence (AI) and its potential use for small businesses. Even though only 8% of SMBs reported using AI today, 32% said they planned to implement it in the future.
Among the businesses already using AI, about 3% said they already use the tech to handle automated service chatbots, and another 25% said they planned to use it for that purpose. Lead prioritization and predictive audience marketing were also eyed as potential uses for AI. Automatic recommendations for customers and predictive sales forecasting were also anticipated uses for AI.