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Survey: Small biz increasingly use social media

An increasing number of business owners are adopting social media as a way to better market their business and reach more customers, according to the latest Citibank ( small business survey. The increased use of social media represents one of several findings in Citibank’s survey that shows small businesses are taking concrete action to grow in 2011.

According to the survey, use of social media increased significantly over the last year, with 36% of small business owners saying they use social networking sites such as Facebook, Twitter or LinkedIn to market their business, compared to just 19% a year ago.

Additionally, when asked what steps they will take to attract more business in 2011, 68% of small business owners say they will increase marketing and 54% say they will offer new products and services. Of those who plan to do business in a larger geographic area this year (38%), 49% plan regional expansion, 18% plan national expansion, and 16% are looking toward international expansion.

“As one of the main drivers of job creation and economic growth in the United States, small businesses are crucial to a robust and sustained recovery,” said Raj Seshadri, the head of Small Business Banking at Citibank. “We are thrilled to find that many small businesses believe the time is right to expand their business and find new customers, and at Citibank, we are committed to helping them succeed and grow.”

Business Conditions, Outlook Stabilizing

Though a majority (68%) continues to rate current business conditions as fair or poor, Citibank’s survey shows that small business owners clearly believe the worst is over, with 53% describing 2011 conditions as “steady as a rock.” Sixty-nine percent say their business is better or about the same as a year ago, compared to 31% who say it is worse. Looking at the rest of 2011, 81% expect the year to be better or about the same as 2010, with 19% expecting it will be worse.

Among the surveys other key findings:

• 76% say they would start their business again even if they knew then what they know now about the challenges they would face;

• 66% of respondents are likely or very likely to use a website to expand their business in 2011;

• 58% say they will work longer hours themselves to grow their business;

• 55% say the biggest benefit of owning a business is being your own boss.

Hiring Plans Improve

Though still tepid, the number of small businesses that plan to increase their workforce in the next 12 months improved in Citibank’s latest survey, increasing to 19% in April from 14% in January. Seventy-four percent plan to keep the same number of employees, down from 78% in January, while 7% plan to reduce jobs, which is flat compared to earlier in the year.

When asked about wages, the majority of respondents say the compensation they pay their employees has remained the same in the past year, compared to 28% who have increased wages and 12% who cut pay. Fifty-one percent say they provide healthcare to their workforce, compared to 49% who say they do not.

Taxes, Healthcare, Energy Costs Pose Biggest Challenges

Of course, small businesses face many unknowns and challenges. Eighty-three percent of respondents say they are concerned about another economic downturn, while 77% say they are prepared should one occur.

When asked what would have the most negative impact on their business this year, small business owners say the increased cost of gas and energy (33%), the rising costs of raw materials (18%), and inflation (15%). Respondents cite reducing taxes (37%) and lowering the costs of healthcare (19%) as the most important issues to address if advising policy makers.

Overall the survey’s results show clear signs of an improving outlook among the nation’s small businesses, said Seshadri. “We are very encouraged by these findings, which show small business owners are out of survival mode and moving into growth mode,” Seshadri said. “The increased hiring and growth plans of many small business owners represent incredibly positive developments for our communities and our economy.”

About the Survey

This Citibank poll was conducted via telephone by Abt SRBI from April 8 to April 21, 2011, among a national random sample of 1,004 small businesses in the United States, with revenue over $100,000 and no more than 100 employees.

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