Social Media Usage in Entrepreneurship (Blog Post)

McNair Project

Social Media Usage in Entrepreneurship (Blog Post)
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Abstract

This blog post aims to reveal the powerful effects of social media on SME's and point out the significant gap in usage.

Blog Post

Social media is an incredible tool. From the obviously marketable Pinterest, LinkedIn and Twitter to the seemingly frivolous Facebook, reddit and Instagram, social media's diversity of audiences is only rivaled by its efficiency in reaching them. While social media tends to permeate into every aspect of a person's life these days, research from The Social Sciences seems to suggest that "not many" entrepreneurs of small to medium sized firms know about the benefits of social media in entrepreneurship. Thankfully, statistics from the Heartland Monitor poll conducted by Allstate and NationalJournal reveal some substantial benefits.

59% of social media users say that a company’s social media activities make the company appear “accessible and responsive," and 64% of social media users want to see companies use social media for customer service. Furthermore, the poll's statistics show that just being available on social media can be beneficial to sales. These benefits are further reinforced by research on small to medium sized enterprises, or SME's, from the International Journal of Humanities and Social Science. The study claims that social media tools offer greater market accessibility and customer relations which in turn have a significant impact on the growth of SMEs. The study further postulates that geographical barriers can be broken down by the use of social media and that social media allows businesses to communicate speedily and cheaply with customers.

One of the more novel findings of the study is the vale of social media for creating a customer database based off of digitally recorded preferences, locations, and trends. While the study found little effect on SMEs from social media in the areas of pricing and innovation, the study still strongly recommends that policies which encourage best practices in social media be adopted in order to promote the growth of SMEs. Despite all of this evidence, the Heartland Monitor poll reveals that only 50% of small businesses are using social media.

If the benefits are so apparent, why aren't more small businesses using social media? When asking this question, the researchers from The Social Sciences found that the biggest barriers were a "lack of computer knowledge" and a "failure to see an effect of social media on small business. An independent study published in the LinkedIn Pulse claims that a lack of perceived return on investment, a lack of time, and a perception that their consumer base does not use social media are the largest dampeners of SME social media performance.

Keeping in mind the seemingly well-established links between social media presence and small business performance, a potentially convincing set of strategies may emerge. Through subsidized educational programs, computer skills among entrepreneurs could increase and the initial investment and time costs of a social media presence could be reduced. A spreading of the empirical data linking social media use with business returns could also potentially be beneficial allowing entrepreneurs to envision a return on investment and feel more comfortable taking the first critical steps into the social media arena. In the "dog-eat-dog" world of small business today, it is critical to maintain the advantage, and a seemingly clear way to do that is through social media use.

References

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