BALTIMORE – U.S. small businesses, typically known as the innovation engine that fuels economic growth, may have reached a roadblock when it comes to marketing innovation.

Contrary to the optimistic outlook in 2009, the fourth wave of the Small Business Success Index (SBSI), sponsored by Network Solutions and the Center for Excellence in Service at the University of Maryland’s Robert H. Smith School of Business, indicates that the recession is stifling small business owners from pushing the limits on innovative marketing. Only 37 percent of small businesses say they are highly successful at coming up with new ideas to grow their business compared to 47 percent last year.

“Creative thinking and the determination to push the limits on innovation are the hallmark characteristics of entrepreneurs,” said Tim Kelly, CEO, Network Solutions, an advocate of small business success. “Having a strong presence on the Web gives business owners a great launch pad to showcase their innovative spirit and build brand awareness for the products and services they offer.”

Those businesses that are successful in innovation and marketing use technology as a source to generate leads, build brand awareness and develop new ideas for overcoming challenges. In addition, they are more likely to be minority owned. Small business owners who are highly successful at marketing and innovation differ from the majority. 39 percent consider internet technology to be important to their business; 26 percent use online advertising, more than other businesses (18 percent); and 72 percent expect to make a profit from using social media.

“The ongoing recession has certainly pushed our limits on marketing and innovative thinking. It’s difficult to stay inspired and optimistic when the economy remains stagnant,” said Heidi Kallett, owner of The Dandelion Patch, a stationary and gift retail business. “Technology is a huge ally for small businesses. I stay ahead of the curve by leveraging the internet and social media to stay connected with my customer base and also maintain an online presence for Dandelion Patch. The internet has no doubt helped me to form personal relationships with my customers.”

Websites remain no. 1 priority for small businesses: Companies remain invested in maintaining their websites: 67 percent of small businesses have or are likely to have a website in two years. Websites are the fastest growing online solution and remain at the core of online presence. Rather than replace website investments, social media is increasing them. Of those small businesses that use social media, 30 percent are likely to increase their investment in their website because of social media, and another 60 percent do not plan to change their website investment in the next year.

Social media usage by small business shifts from lead generation to increased brand awareness: While six months ago small businesses were focused on the ambitious goal of attracting leads with social media (71 percent vs. 73 percent in Dec 2009), they now look to social media simply to build awareness of their organizations (77 percent vs. 56 percent Dec 2009). They are also more likely to use social media to stay in touch with their current customers (62 percent) than six months ago (46 percent).

Small business exports decline while buying supplies from outside the U.S. increases: The number of companies conducting business globally has dropped from 19 percent to 14 percent since December 2009, but companies buying supplies from outside the country has seen an increase from 11 percent to 18 percent since December 2009. Also there is a positive correlation between small businesses using social media and the income they generate from multiple countries.

Access to capital continues to be a roadblock for small business growth: Only 36 percent are successful in covering long-term capital needs, which is slightly worse than a year ago when it was 39 percent. Capital access combined with the stifling of innovation seems to pose a huge roadblock to small business sustenance.

“Small business owners who hit roadblocks on marketing and innovation should turn to social media,” said Janet Wagner, director of the Center for Excellence in Service at the Smith School. “Tools such as Twitter and Facebook have made it faster, cheaper, and easier for even the smallest business to communicate with its customers and get ideas for new products and services. Technology-savvy small business owners who leverage the Internet will be in a strong position to compete going forward.”

The Network Solutions Small Business Success Index allows business owners to score themselves on six key dimensions:

Capital Access

Marketing & Innovation

Workforce

Customer Service

Computer Technology

Compliance

This column was written by Mark Cox of ConnectIT, an IntegratedMar.Com

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