CDW survey finds small businesses paring staff and costs, shifting growth strategies to beat the recession, but structural risks remain VERNON HILLS, Ill. – November 4, 2009 – CDW Corporation, a leading provider of technology products and services to business, government and education, today announced the 2009 CDW Report on Small Business Resilience, which identifies management and information technology (IT) infrastructure factors that contribute to business survivability and studies how small businesses are responding to the economic recession. Based upon a survey of 613 small businesses nationally, the report states that just 45 percent of small business owners are optimistic about their prospects for growth throughout the next five years and that they are shifting marketing and operating strategies to address the rocky business climate. In addition to economic threats, the report indicates that small businesses often contend with structural vulnerabilities that affect their resilience even in good times, including over-reliance on their top leadership, a lack of structured business processes and risky under-protection of critical information.
“The recession has severely challenged small businesses, but it has also spurred owners to re-configure their strategies and tactics in ways that will help them once the economy rebounds,” said Maria Sullivan, vice president, CDW Small Business Sales. “The CDW Report on Small Business Resilience finds that businesses could significantly increase their resilience – in good times or bad – by doing more to capture, preserve and share the knowledge and insights that their principals accumulate throughout years of experience.”
Upwind in the Storm: How small businesses are trimming their sails
CDW’s Report on Small Business Resilience finds that 79 percent of small businesses are taking concerted steps to mitigate the recession’s squeeze on profits. While small business layoffs seldom make headlines, the sector employs half of the U.S. workforce, and 30 percent of respondents say they have reduced their staff. An additional 20 percent report that they have reduced staff compensation and benefits without implementing layoffs. Beyond staffing measures, 61 percent have reduced other operating expenses, and 22 percent have cut capital spending in areas other than IT. Asked specifically about IT investments, 12 percent say they have cut IT spending, while 14 percent say they have invested in new IT tools in order to increase business efficiency.
To fight revenue losses, the report finds that small businesses have modified their marketing and sales tactics in 2009. Compared to 2008, tactics shifted significantly toward one-to-one engagement of customers, with 56 percent of respondents saying they have increased direct sales outreach to their clientele. Marketing is increasingly online as well, as 48 percent increased social media and Web 2.0 activities, 47 percent are enhancing their Web sites, and 44 percent are increasing use of e-mail marketing. To fund those increased investments, 34 percent reduced spending on advertising, while 27 percent cut direct mail programs and 25 percent downsized sports and event advertising sponsorships.
Management and Resilience: Put the “us” in your business
On management resilience dimensions, the report found that most small businesses are keenly aware they rely too heavily on their top executive or partner, but relatively few are working to reduce that dependence. Only 23 percent of respondents expect their operations and sales would continue normally should they lose their company’s owner or top executive for six months or longer, while 31 percent expect they would face a significant chance of company failure and 16 percent said their company would almost certainly go out of business.
“Knowledge management” is a fashionable term for any systematic approach to identify, preserve, share and leverage valuable information as well as insights from key personnel. Despite the admitted high risk associated with loss of key executives, CDW’s Report on Small Business Resilience indicates that 62 percent of small businesses do not have a knowledge management strategy.
The report also found that planning processes are key to business survival. Business continuity/disaster recovery (BC/DR) plans, or crisis management plans, address temporary operational requirements during a disruption, as well as restoration of facilities and critical personnel. CDW’s survey found that only 35 percent of small businesses have BC/DR plans to prepare them for unexpected business disruptions such as natural disasters, fires or manmade catastrophes.
Comparing subgroups of participants, the survey analysis also found that the longest-lived and most consistently profitable businesses are more likely than their peers to have defined marketing budgets, a comprehensive client database and a diverse clientele – meaning their top five customers generate less than 30 percent of total revenue.
Infrastructure and Resilience: How safe are you, really? Think again
The CDW Report on Small Business Resilience found that 99 percent of small business leaders believe that their businesses could recover their data in the event of a major loss – and yet other findings from the same study suggest that many businesses should not be so confident. For example, 73 percent of small businesses that have computing networks report they have neither onsite nor offsite data backup (65 percent of respondents have computing networks) and 29 percent have no backup power for their data center or data storage. Even among businesses that report having BC/DR plans, 33 percent make no provision for restoration of data and computer systems, 32 percent do not include offsite data backup and 16 percent include no regular backup of critical data at all.
The use of a computing network typically increases attention to security, and the report confirms that small businesses with networks make significantly greater use of protective measures than those without networks. For example, 88 percent of businesses with networks employ anti-virus/anti-spam suites to protect every desktop or laptop, compared to 68 percent of companies without networks. Network-equipped businesses also have similarly stronger security management practices, with 59 percent updating user passwords regularly (compared to 30 percent of other businesses) and 50 percent enforcing policies regarding software application downloads to company computers (only 20 percent at businesses with no network).
The survey also revealed that the most consistently profitable and longest-lived small businesses are more likely than their peers to have full-time, on-staff IT support, a written business continuity/disaster recovery plan and a company-wide network with a multi-level approach to IT security.
“We are acutely aware of how many challenges small business owners face, and each of those challenges is daunting even in isolation,” Sullivan said. “Our goal in publishing the CDW Report on Small Business Resilience is to encourage small business owners to focus on the greatest opportunities to strengthen their business and learn what tools are available to help them do so.”
About the CDW Report on Small Business Resilience
CDW conducted its Small Business Resilience Survey during July 2009, collecting responses from 613 small business owners and senior managers – 50 percent from businesses with 1 to 19 employees and 50 percent from businesses with 20 to 99 employees. The sample includes respondents from companies that have been in business for more than 10 years (64 percent), from five to 10 years (17 percent) and less than five years (19 percent). The margin of error for the total sample is ±3.9 percent at a 95 percent confidence level.
For a copy of the complete CDW 2009 Small Business Resilience Report, please visit http://www.cdw.com/smallbizreport.
CDW is a leading provider of technology solutions for business, government and education. Ranked No. 34 on Forbes’ list of America’s Largest Private Companies, CDW features dedicated account managers who help customers choose the right technology products and services to meet their needs. The company’s technology specialists offer expertise in designing customized solutions, while its advanced technology engineers can assist customers with the implementation and long-term management of those solutions. Areas of focus include notebooks, desktops, printers, servers and storage, unified communications, security, wireless, power and cooling, networking, software licensing and mobility solutions.
CDW was founded in 1984 and as of September 30, 2009 employed approximately 6,250 coworkers. In 2008, the company generated sales of $8.1 billion. For more information, visit CDW.com.