18 Feb

Why Statistics Are Not Always What they Seem

Statistics and the small business marketThis statistic is making the rounds and lots of people are repeating it:  only 44% of small businesses have websites.  It’s from a survey by Webivisible and Nielsen.

I am skeptical.

Before blindly accepting that as gospel truth, I suggest we examine this statistic more closely.

(1) No one really knows how many small businesses have websites —  This is not something for which you can find hard external evidence.  The U.S. Census doesn’t cover it.  There are no databases of information that will give you a good answer to this question.  So the best that can be done is to take a survey and extrapolate based on that.

(2) Sample size is key in a survey —  The survey referenced above was based on 261 SMBs.  Now, that’s a mere fraction of the 27 million small businesses in the United States.  While I think this survey is an interesting data point, it’s just one data point.  Don’t stake your life or reputation on it, because the sample size is pretty small. 

(3) There’s not enough data about the businesses to make that statistic meaningful — The survey doesn’t say what size of small businesses were surveyed.  It doesn’t break down the responses by age of the business.  Nor does it tell you what industry the respondents are in. 

Those are critical factors that drive a small business’s need for a website and the value the website can deliver. 

In other words, some small businesses need a website more than others.

Let’s take size of the small business, for instance, and examine that for a moment.

If you’re talking about single-person businesses — the consultant or freelancer who just got laid off 6 months ago and decided to start a business, or the small landscaper who plows snow in the winter and cuts lawns in the summer — then I find it a lot easier to buy that 44% figure. Business owners in that situation tend to have tiny marketing budgets anyway — zero to perhaps a few hundred dollars a month. 

Plus, a micobusiness that small only has the capacity to handle a limited number of clients or customers at a time.  Many times the owners don’t plan to or even want to grow.  Growth would require substantial expenses to hire employees, add trucks and equipment, get insurance, etc. — eating into their profits short term.  For a business of that size, it’s hard to justify a website in the midst of a long laundry list of pressing  needs, including their need to feed and clothe their family from their earnings.

On the other hand, if you’re talking about larger small businesses — say with at least a couple of employees or revenues over a half million — that 44% figure is nonsense. A much higher percentage have websites. 

There’s another reason I am skeptical.  That 44% figure, as a blanket statement, just doesn’t square with my own experience. It’s a rarity these days for me to meet an established business owner of a substantial-sized small-business at a networking event who doesn’t have a website.  In fact, it almost never happens any more.  Five years ago that happened — but not today. 

To make a statistic like this valuable, it needs to be broken down into smaller chunks … segmented.  I think that if another survey were done that asked the right questions, it would have value for us all:

  • size of business (by annual revenues, and by number of employees)
  • age of the business (startup vs established)
  • industry the business is in (some industries are entirely local and prospective customers do not yet go on the Web in large numbers as their main way to find a vendor, for customer service information,  etc.) 

As it stands, trying to lump all 27 million small businesses into one homogenous whole with one statistic, doesn’t really tell you much of anything useful.  But break it down, and suddenly the information becomes meaningful to those selling Web design, marketing services, and other Web-related products and services to small businesses.

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  1. Sheryl Schuff, CPA said on February 18th, 2009 at 12:48 am

    My experience is mainly with the microbusiness owners you discuss and I believe the statistics are representative of that group. I respectfully disagree with your comment that those folks don’t need and can’t afford a web site.

    There are many more reasons to have a web site than just to attract new customers. A web site can make it easier for your current customers to find your phone number, location, and hours. A web site that explains your services can encourage current customers to hire you for projects they might otherwise not have known you were able to do.

    A well constructed web site with good FAQs can help you provide better customer service and can actually be working for you 24/7. I could go on, but I think you get the idea.

    Having a web site can also increase the customer’s perception of the value of the services you provide. Many consumers expect “serious” business owners to have a web site.

    As far as the cost is concerned, a professional looking small business web site (especially a brochure-type web site) can easily be created for an investment of less than $10 and maintained for under $ 10 per month.

    There’s a downloadable guide on my web site explaining the step-by-step procedure for creating such a web site. No fine print, no password, no opt-in required. Totally free. Designed to help small businesses get on-line quickly and easily.

  2. didier grossemy said on February 18th, 2009 at 4:45 am

    size of the business is not relevant to the size of the effort, the challenge is always to build up a brand that respond to the market. Today the digital age is not any longer just driven from children looking at games or business people searching the next opportunity but from us to around the world.

  3. Martin Lindeskog said on February 18th, 2009 at 8:18 am

    I think that more than 44% of the small business companies have an online presence of some sort. We could then discuss how active it is, updated since it was first published, etc. Many companies have a simple site as their virtual business card with contact information and some information on the company.

    The positive thing is that web designers, creators of blog templates, etc., could have a golden opportunity to reach out to the 56%… 😉

  4. Party Plan Pat said on February 18th, 2009 at 8:19 am

    As one who was a psychology major, and research assistant, it is very refreshing to see a well writting piece that takes in account sample size and age and let us not forget accessibility. If people can’t participate in the study then the result are null and void!

    That said there many brick and mortar business still not online. Majority of which are more stemming from socio-cultural norms and ways of life. I don’t want to use the word ethnic (again another term that could use research), but many people of latin descent and african american are still in the grasping the idea phase. So let’s keep spreading the word!

  5. Alastair said on February 18th, 2009 at 8:22 am

    Good point Anita. In my business networking here in Ireland I’ve found that 100% of established SMEs have websites, and that the vast majority of startups over 18 months have a website also.

    Now whether those websites are of high quality or sufficient for their needs, that’s a different issue. If the statistic was that “44% of SME websites are of poor quality”, now that I’d believe!


  6. Beth Schoenfeldt said on February 18th, 2009 at 8:30 am

    I totally agree with you, I have been working with women entreprenuers for over 10 years and surveyed them for books and studies, and I found that 80% of over 1000 surveyed had websites. I also agree that many are of poor quality, but they have them.

  7. Travis Campbell said on February 18th, 2009 at 9:04 am

    Great points Anita. I wonder if those who put the report together can comment on your thoughts. Perhaps it will inspire them to do a revised survey, or a new one entirely.

    As the saying goes: “There are three kinds of lies: lies, damned lies, and statistics.”

  8. Amanda said on February 18th, 2009 at 10:36 am

    Interesting that they think 261 SMB’s make up the entire community of small business owners. I would be inclined to think that the number is a bit higher, however I have searched for many a business online and come up empty. A lot of missed opportunity for business owners and web designers.

  9. Susan Oakes said on February 18th, 2009 at 3:31 pm

    You make good points especially about the sample size and the composition of the sample. I would not have thought the sample size was not large enough to produce statistically significant results. Also a survey can give you different results depending on the questions asked.

    I think in the same survey they said that the over 60% of consumers and small business turn to the internet for information about local businesses . It would be interesting to know the objectives of the research.

  10. Arthur Bland said on February 19th, 2009 at 1:02 am

    “size of the business is not relevant to the size of the effort”

    Hi Didier, don’t you think the annual revenues can somehow justify how much effort you put in for your business?

  11. Arthur Bland said on February 20th, 2009 at 1:24 am

    I also agree that many are of poor quality, but they have them.- – Beth, what are your criteria in classifying high and low quality business websites?

  12. Bianca Aquino said on February 23rd, 2009 at 4:14 am

    This sounded a bit pathetic to me — releasing statistics to the public that are not well grounded. 🙁

  13. Staci said on February 23rd, 2009 at 12:48 pm

    That’s such a small fraction of small businesses and I wonder why? I’d be much more interested in seeing the survey open up online for participants and then taking a look at those results. With such a small fraction being included in this particular one, its hard to glean any real useful information from it, unfortunately.

  14. Bianca Aquino said on February 24th, 2009 at 1:15 am

    Exactly Staci… !

  15. Joe said on February 26th, 2009 at 4:28 pm

    OK, it’s a good idea to be skeptical of any statistic, but a random sample of 261 observations is large enough to be ‘accurate’. As long as the sample is representative, you won’t get big gains in accuracy going from 1000 to 10000 to 100000 observations, and the size of the sample relative to the population does not affect accuracy.

    So, maybe you think the sample is not representative – not enough larger firms. If it was a good survey, they sent out about 1000 surveys to firms representing the proportions of several classes of firm sizes from census data. They probably got about 150 back at first, but they did not get enough from some size classes. They kept surveying until they got enough to represent each size class in a stat significantly way (=261 total). Now, I’m guessing there are a lot more small businesses with 1 employee and revenue 50mill. The survey isn’t attempting to weighting the responses by business size, they just want to say estimate how many small business have website. If you average a big sub-group that has few websites with a smaller sub-group that all have websites the result is a low rate around 50%, which is exactly what they found.

    Also note that ‘not allowing everyone to participate’ does not make the results ‘null and void’. You’re thinking of selection bias, but if you randomly pick who you ask you do not have selection bias. You do have selection bias if you put the survey on the internet for ‘everyone to participate’ because the people most likely to participate are those using the internet (and also using it for business). The same is true for meeting people at a networking event and finding they all have website; in this case the sample of businesses probably think networking and marketing is important to their business and so they are more likely to have websites.

    Maybe instead of berating the statistic, you need to think harder about what the statistic is telling you – you think all businesses have a website because you work and network among the part of the sample (population) businesses that do have a website, but there are a whole lot more businesses out there that don’t have a website.

  16. Beware of Small Business Averages said on July 7th, 2012 at 10:01 am

    […] A case in point is the numbers you often read answering the question: ”how many small businesses have websites?”  Typical responses say: 50% of small businesses have websites.  Or more recently, 44% have websites. […]

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