Small businesses are a fundamental engine of the economy. In recent years, they have undergone an unprecedented transformation. This is due to challenges imposed by the COVID-19 pandemic, the rise of large e-commerce platforms, or the need to digitize their businesses to stay afloat, among others.
At GoDaddy, we are aware of the challenges posed by all these factors for entrepreneurs and small businesses. We also know that to stand by their side and provide them with the necessary tools to start and manage their businesses on the Internet, it is therefore necessary to fully understand them.
Hence, with this goal in mind, GoDaddy is announcing the results of the Small Business Data Observatory 2023. This is a study of the current state of small businesses at an international level.
Key Findings of the Report
GoDaddy has conducted The GoDaddy 2023 Data Observatory in collaboration with Advanis. Over 4,800 small business owners in Brazil, Colombia, Germany, India, Mexico, the Philippines, Singapore, Spain, Thailand, and the United States formed the sample for this survey.
The report covers three streams of content: business, marketing, and technology & digital index.
Below, we share the results of this first set - business. This set of results is focused on how entrepreneurs and small business owners manage their businesses.
What is the level of maturity of small businesses?
One of the main issues we address when understanding the small business landscape is their age. In other words, how many years they have been in the market.
This provides insights into the stability of these small businesses in each market and the current interest in micro-entrepreneurship.
Globally, 46% of the small businesses surveyed have been in operation for 1 to 5 years. This figure is 55% in India.
Only 10% of the surveyed companies were established in the past year globally, 10% in India.
What sales channels do small businesses use?
In today's fast-paced business environment, small businesses strive to find effective ways to reach their customers and ensure their survival in a highly competitive market. In this context, it is crucial to understand their main sales channels. This, in turn, reveals strategies and emerging trends that drive their growth in the ever-changing business landscape.
Globally, the Data Observatory reveals that 61% of small business owners use a website, an online store, or an e-commerce platform as their main sales channel. India (62%) is among the countries surveyed that are above the average including the United States (66%), Germany (70%), and Spain (65%) embracing these sales channels.
Social media platforms are also a valuable part of a sales strategy with 58% of the surveyed entrepreneurs globally also selling through this channel. In this case, these platforms have a higher acceptance in Latin American countries such as Mexico (68%) and Colombia (61%), and Brazil (59%). India comes in at 55%.
Sales through phone calls and physical presence round off the three most used channels. Globally, 37% of the businesses surveyed utilize these channels to reach their customers (46% in India). These data reveal that having a strong online presence with multiple complementary channels is vital for businesses to thrive in digital environments.
Thanks to the results of the 2023 Data Observatory, we understand that digital channels play a significant role in small businesses today. Next, we will delve a little deeper into this topic.
What experience do small businesses have in digital environments?
The ability to sell products or services online has opened a world of opportunities and challenges for small businesses. But how long have these companies been using digital channels to market their products or services?
At a global level, majority of the surveyed businesses (55%) have been selling through digital channels for 1 to 5 years. Twenty percent of them have been doing so for less than a year. Only 10% globally have been selling online for over 10 years.
In India, 63% of small business surveyed have been selling online for 1-5 years. Twenty percent for less than a year, and 4% have been selling online for over 10 years.
How do small businesses promote themselves in their first 3 months of existence?
When starting a new business, initial steps that an entrepreneur takes to promote it are crucial for establishing a solid presence in the market.
Globally the top five actions these businesses tend to focus on is creating profiles on social media platforms (38%), advertising online (30%), personally contacting potential clients (29%), creating a logo for their company (28%), and launching a website (27%).
In India, starting small businesses with a social media account is the most common step (35%). This is followed by online advertising (34%) and personal contact with potential customers (33%).
These strategic actions mark the beginning of the journey towards business success in the digital era.
What channels do small businesses currently use to promote themselves?
But what actions are most effective after those first 3 months of existence?
At this point, the surveyed small business owners have a clear understanding:
- Globally, the most used channels are online advertising campaigns (38%), direct contact with customers via phone calls (34%), and launching offers and promotions (30%).
- Only 24% of the respondents have created a corporate website for their business.
For India, contacting customers by phone is also relatively widespread (34%). Among Indian small businesses and tackle many activities at once.
The importance of online revenue for small businesses
At this point, it is relevant to understand the percentage of revenue that businesses obtain through online channels.
Let's explore how small businesses have capitalized on the potential of digital channels. We also dive in to see how these revenues have become an increasingly significant part of their total earnings.
Globally, 64% of the surveyed small business owners reported obtaining up to half of their annual revenue through digital sales channels (65% for India). 37% indicated that they generate between 51% and 100% of their revenue from online sales channels (36% for India).
What challenges do small businesses face today?
In an increasingly competitive business environment, these emerging companies face barriers and obstacles in their day-to-day operations. But what, in their opinion, are the major challenges they must confront?
First and foremost, small businesses point to increasing the number of customers as their primary future challenge. This is highly logical. In a competitive and ever-evolving market, acquiring new customers becomes essential to expand revenue base and ensure business sustainability.
Customer loyalty is also crucial for small businesses' long-term success and stability. It entails not only repeat purchases but also an emotional connection with the brand, positive recommendations, and greater engagement in programs and promotions.
For this reason, increasing customer loyalty ranks as the second challenge for small businesses globally.
Optimizing costs, enhancing business visibility, and improving internal processes complete the list of the top five challenges for small businesses globally.
Main conclusions from the Data Observatory 2023
The small business landscape is characterized by diversity and adaptability. The study's findings reveal an entrepreneurial spirit in various parts of the world, such as Brazil, Colombia, and India.
The importance of digital channels, both in their usage and profitability, is increasingly significant. Their growing role in gaining visibility, attracting new customers, and fostering customer loyalty is undeniable in today's market.
In a highly competitive market, the importance of digital transformation and the ability of small businesses to adapt in an increasingly digitized business landscape are highlighted.
At GoDaddy, we are committed to supporting these businesses and entrepreneurs in making the leap to the online world by providing them with the necessary tools and technical knowledge to facilitate this transition.
The digitalization of these businesses is becoming a priority, and now more than ever, it is crucial to invest in it.
