Tech and Small Biz:
Attitudes, Uses, and
a Geographic Divide?
Andrew Langer
Phoenix Center Retreat Presentation
October 19, 2007
Areas of Focus
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NFIB and the Small Business Reality
Paperwork and Technology
General Small Biz Tech Attitudes
Looking More In Depth
Some General Policy Conclusions
Who is NFIB?
• Nation’s Largest
Small Business Trade
Association
• Great Breadth of
Membership and
Scope of Outreach
• Members
Representing All
Manner of Trades
• Average size is 5
Employees
NFIB’s Constituents Provide 60% of New Jobs!
Member Regulatory Concerns
• Figuring Out What
Needs to Be Done
• Sheer Amount of
Paperwork
• Time Spent Filling
Out Paperwork
• Environmental
Concerns are of
Paramount importance
to our members.
• But not one reg in
particular….
Our Members See Regulation as “Death by a Thousand Pinpricks”
An Appraisal of the Problem
• The Current Regulatory Burden
• Small Businesses Are Different Than Big
Businesses
• Regulations Aren’t Taken in Context
The Current Regulatory Burden
• Scope of Regulations Impacting Small
Business Is Vast
• Cannot Even Assess Number of Criminal
Statutes on the Books
• Costs Calculated by SBA’s Office of
Advocacy as nearly $8,000 per employee
PER YEAR!
Regulatory Burden: Macro Costs
• $1.14 Trillion Annual Regulatory Costs
(CEI)
• 8.2 Billion Hour Annual Paperwork Cost
(OMB)
• Which Translates Into Roughly $400
Billion Annually (NFIB Research Found.)
Small Businesses
Are Different Than Big Businesses
• Regulatory Costs Are Higher
• Don’t Have the Personnel of larger firms
• Don’t Have Access to State-of-The-Art
Equipment
• Cannot Readily Hire Expertise
Electronic Assistance
• E-Rulemaking (Regulations.Gov)
• Business Gateway: Compliance One-Stop
Eliminating Paperwork is of
Maximum Import
Constraints For Small Entities:
Time And Energy
NFIB Research Foundation Paperwork Survey
• Conducted In 2003
• Survey of Small Business Owners
Generally
Findings
• Owners Most Frequently Do Paperwork
• Average Cost Per Hour is $48.72
• Most Use Both Computers and Paper for
Recordkeeping and Filing
• Computer Use is Growing, now at 92%
Problems With Paperwork
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Unclear and Confusing Instructions
Volume Itself
Duplicative Requests
Maintenance of Records
Requests for Non-Existent or Inaccessible
Information
Thus An Economic Problem
• Already Spending Considerable Amounts of
Time Doing Paperwork
• Therefore An Opportunity Cost Situation
Arises
Which is where use of technology comes in…
Use of Computers to Reduce Burden:
The NFIB 2004 Survey on Tech use
• 82% Have Internet Capabilities;
• About half use it to find out regulatory information;
• 57% of regular users have a high speed internet
connection, mostly at home;
• Smaller business more likely to use the internet to
educate themselves;
• Use it for specific searches and to sift through
information;
Use of the Internet Generally
• 57% Use The Internet for Business-Related
Purposes
They use it to:
• E-mail Customers and Suppliers
• Gather information about the field
Websites?
• 2/3 of Businesses that use the internet have
websites;
• Income from Websites Generated Indirectly
• Customers Are Driven From Web to More
Traditional Sales (face to face or by phone)
• Lifespan of Websites is approx. 2 years.
• Negligible cost to the small business owner.
High Speed Net Access
• Initially Found in Homes Rather than
Businesses;
• Most Common Access in Business is DSL;
• High Speed Internet Access Is An Enabler
(More Later);
• Number Who View It As A Necessary
Competitive Advantage Is Growing;
Other Tech Issues
• Considerable Competition for Small Firms’
telecom biz;
• 40% shopped for new local phone service in
previous three years, 71% switched;
• 78% Use a Cell Phone. 57% shopped for new
service and 63% switched;
Poor Service Biggest Issue for Cell Phones
70% of Owners Take Responsibility for Choosing
Telecom Options
Home Internet Access – Special Issues
• Convenience Factor in Ability to Do
Business-Related Work Away From Office;
• Problems Created When Sharing Computer
Among Family Members;
• Creates Its Own Special Set of Security
Problems
What Divides Tech Today?
• 2007 Study by NFIB Research Foundation
• Focused on Tech, Banking, and Small Biz
• Built Upon Previous Research That Didn’t
Examine Small Businesses
• Identified Some Areas of General
Applicability
Earlier Studies
• Petersen and Rajan (2002) – Tyranny of Distance
remedied by tech access,
• But only if players have internet access (especially
broadband)
• SBA’s Pociask Study (2005) – Broadband
Investment can stimulate productivity and output
• But Significant Differences in Broadband Use
between Urban and Rural Areas
Differences in Age of Owners/Age
of Businesses…
• Younger Firms with Younger Owners More
Likely to Use Internet for Banking
Transactions
• 63% of owners under 35
• 63% of firms younger than 6 years
• 30% of owners older than 65
• 36% of firms older than 30 years
Other Divisions…
• Home-Based Businesses More Likely to
Use Technology for Banking
• Bank’s websites are important drivers to
their use
• Higher Education Credentials Indicative of
Tech use
Technology As An “Enabler”
• 53% of Survey Respondents Found
technology increasingly “helpful” when it
comes to banking;
• When broken out for internet users,
percentage rose to 76%
• Younger Owners and Firms More
Frequently Report Technology as “helpful”
• As do home-based businesses
A Geographic Divide?
• Firms in Less-densely populated zip codes
less frequently used the internet for
banking;
• Website Importance also increased with
population density;
BROADBAND ACCESS MORE LIKELY IN
URBAN AREAS!!!!
Conclusions – Part 1
• Small Business Owners are like many other
consumers in their tech use;
• Cost and Service Conscious;
• They View Technology as an “Enabler”
• Use Is Growing, But Some Business
Owners Will Never Be On Web or Tech
Savvy
Conclusions: Part 2
• Age of Owners and Age of Business
Important Factors
• Population Density, and Therefore
Geography, Also Important
• Broadband Access important as well
There is A Geographic Digital Divide
Thank You!
Andrew M. Langer
(202) 314-2032
[email protected]
www.411smallbusinessfacts.com