Community is a core focus for small business owners – on both personal and business levels. A majority of business owners surveyed in the latest Wells Fargo/Gallup Small Business Index cite word-of-mouth and local publications as the top two most effective forms of advertising. The Q4 2005 Index found that of the 55 percent of business owners surveyed who spent money on advertising in 2005, 67 percent did so in their local newspaper or magazine. Results also confirm that more than half of small business owners surveyed believe that customer recommendations are more effective than paid advertising.
"Small businesses traditionally have a very strong community focus, and it is clear from these results that this extends to how they prefer to advertise their businesses," said Rebecca Macieira-Kaufmann, executive vice president and head of the small business segment for Wells Fargo. "A small business owner is more likely to talk to their hairdresser, their plumber, or their neighbors about their business, rather than spending their hard-earned capital on advertising. Those who do advertise clearly prefer their local community newspaper or business journal."
Many small business owners are also turning to the Internet for their information needs. With blogs, wikis, and online reviews becoming more accepted forms of creating buzz, the Internet has become a critical tool for small businesses.
Advertising on the web allows small business owners the ability to combine their paid advertising dollars with their preference for word-of-mouth advertising. According to the Index, 49 percent of business owners surveyed have paid to advertise on the Internet over the past two years, and when asked if they anticipate spending on Internet advertising over the next two years, this number increases to 57 percent.
"Advertising dollars are always hard to come by, so when I consider my advertising spend, I want to get maximum value for my dollar," said Yolanda Collazos Kizer, president of Builder's Book Depot and CASA Fenix Enterprises. "If my customers are enjoying our products and services, and they share that information with their friends and family, either face-to-face or on the Web, it engages them in our brands and makes them feel a part of the company. That's the best form of advertising I could ask for."
Advertising is not the preferred option for all small businesses. Forty-five percent of small business owners surveyed did not advertise in the past year, and of that group, 62 percent chose not to advertise because they felt it wasn't appropriate for their business. Additionally, 16 percent said they didn't advertise because it was too costly.
The Index also surveyed small business owners on their use of the media for entertainment purposes. When asked about their favorite radio programs, 45 percent of small business owners surveyed prefer listening to music while only four percent prefer a business or stock market program. Similarly, if small business owners had an hour of free television time, results reveal that only six percent would watch a business or stock market show. The most popular television channels of small business owners, according to the survey, are the four major networks, mentioned by 37 percent of respondents, followed by cable news/business channels (29 percent).
Since the third quarter of 2003, the Wells Fargo/Gallup Small Business Index has surveyed small business owners on a quarterly basis on their perception of current conditions and future expectations relating to financial situation, revenues, cash flow, capital spending, number of jobs and credit availability.
The Q4 2005 Index showed a one-point increase over the third quarter, bringing the total to 107 – indicating that small business owner optimism was essentially unchanged and remained steady for 2005. The higher the Index score, the more positive and optimistic small business owners feel.