The importance of small businesses to the U.S. economy is difficult to understate. According to the U.S. Chamber of Commerce, the 33.2 million small businesses in the U.S. account for 99.9% of total businesses. They also account for about 46% of employment and 43.5% of GDP. The Small Business Administration reports that small business creates nearly two-thirds (63%) of new jobs between 1995 and 2021. For these reasons, a general downturn for small business is not good for the economy. As a result, support for small business can be seen as being helpful to the economy.
Results of a new survey commissioned by American Express and conducted by Morning Consult underscore the fact that the holiday season is critical for many small businesses in terms of year-long profitability and highlights trends that such companies are using to cope with a competitive environment.
Indeed, the top line finding of the AMEX Small Business Trendex survey is that two in three small businesses characterize the holidays as being important to their overall financial situation. Moreover, 89% of retail businesses emphasize the holiday season’s importance to their bottom line. With this in mind, it is good for holiday shoppers to keep in mind the potential for their purchases to make a difference to a small business.
Anna Marrs, Group President, Global Commercial Services and Credit & Fraud Risk at American Express notes that in conjunction with making revenue goals, many small businesses are innovating. “The final months of the year are especially critical to ensure small businesses meet their revenue goals for the full-year,” says Marrs, “From embracing AI and social media to hire and attract new customers, to using these tools to boost growth, small businesses are finding ways to set themselves up for success.”
The Amex survey included responses from a representative sample of more than 550 U.S. businesses and reveals other insights on trends affecting small businesses. As a business school professor, I’ve always held small business owners in high esteem due to the general need to work long hours, show innovation and ingenuity and typically be a “jack of all trades” in the sense of having to perform many different business functions themselves.
The Importance Of The Holiday Season In Achieving Business Goals
In terms of goals for the holiday season, half of the AMEX survey respondents in the overall sample cited acquiring new customers are a primary goal. Next was increasing sales, at 44% for the overall sample. For retailers, increasing sales placed first at 71%, indicative of the high level of competitive intensity in the sector.
The survey results suggest that small business owners are taking advantage of new technology, including artificial intelligence and new uses of social media. This is a very positive development, given the multitude of directions the owners are pulled in.
Increased Use Of Social Media In Advertising And Promotion
Small businesses are also making more use of social media for advertising and promotion, small businesses are using social media, which makes good sense in terms of enhancing targeting.
Social media is regarded as being particularly potent in reaching Millennials and Gen Z consumers, with 58% and 40% of those surveyed stating they will use social media to target these groups. In total, more than 75% of the companies are planning holiday specific marketing campaigns during the holidays, with the leading sites being Facebook (82%), Instagram (63%) and YouTube (48%).
Some businesses report that they use social media to hire workers. Indeed, 29% of the owners indicate that they will hire workers specifically for the holiday season. Perhaps not surprisingly, businesses owned by owned by Millennials and Gen Z aged individuals (42%) report being the most likely to use social media to recruit seasonal workers.
Beginnings Of Growth In The Use Of Artificial Intelligence
As I addressed in a recent column, some uses of artificial intelligence have excellent potential to save small business owners considerable time on functions like accounting or running advertising campaigns in digital media. The AMEX Small Business Trendex survey verifies that there is a trend toward small businesses beginning to use AI. In total 25% of those surveyed indicate they will use AI and 39% see a benefit to them associated with using it, suggestive of growth in the near future.
Moreover, 41% indicate that they are prioritizing AI for their business, a 7% uptick from a similar survey conducted in July.
Jeanniey Walden, an American Express customer and owner of a television show LiftOff with Jeanniey Walden is an example of a business owner already using AI to positive effect. “AI is a cost-effective way to help build business and manage customer experiences,” she says. “There are so many administrative activities that small business owners must master, and AI is making it easier for owners to prioritize their time where they should: on the customer.”
Small business owners face considerable challenges in building successful businesses, especially in an era when competition is intense and hiring is challenging. The adaptations some of these business owners are making are helpful to their ability to compete.
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