By: Chris Shank, Vice President, Verizon Business. Edited by Web Desk
Small businesses have historically been cautious about technology investments, often sticking to familiar, essential areas to stay within budget. However, recent years have brought dramatic change. To keep up with shifting customer preferences, supply chain challenges, and a rapidly evolving marketplace, small businesses (SMBs) are increasingly moving online. This digital transformation has required a new level of technology investment, helping SMBs remain competitive and meet customers where they are. Over the past year, the necessity for this shift has only become more urgent.
Strengthening small business growth through digital transformation
As small businesses embrace digital operations, technology investment is on the rise across industries. According to Verizon Business’ 2024 State of Small Business Survey, SMB technology spending has surged, with 38% of businesses adding online and digital functions just in the past year. A key factor in this shift has been the improvement of internet infrastructure, with 66% of small businesses upgrading their bandwidth—demonstrating that reliable, high-speed internet is essential for any online operation.
With stronger internet capabilities, SMBs are ramping up their online presence to better engage today's digital consumers, particularly through social media. A large majority (84%) of small businesses use Facebook to promote products and connect with customers. Beyond Facebook, businesses are diversifying their digital marketing strategies, leveraging platforms like Instagram (67%), LinkedIn (64%), YouTube (64%), TikTok (57%), and X (54%) to broaden their reach. For over half (54%) of SMBs, social media marketing remains a top customer engagement strategy.
In fact, social media has evolved beyond a promotional tool into a direct sales channel. Thirty-nine percent of small businesses have set up social media storefronts—a notable 8% increase from the previous year. These storefronts enable businesses to meet customers where they want to shop, directly on social platforms, streamlining the purchase process. By allowing consumers to shop directly from these platforms, businesses remove a barrier to entry, making it easier for customers to make purchases without navigating away from their social feeds.
Despite the benefits, many small businesses are still navigating the complexities of social media marketing. In fact, 76% of SMBs say that free social media marketing courses would be the most beneficial resource for their business, underscoring the need for practical guidance as they evolve their digital strategies.
Small businesses accelerate AI adoption to drive growth
While small businesses have traditionally been slow to adopt artificial intelligence (AI) due to concerns about the risks of emerging technologies—such as the potential for AI to open them up to cyberattacks—this trend is shifting. AI adoption among SMBs surged over the past year, with 39% of small businesses reporting they use AI in 2024, compared to just 14% the previous year.
The increase in AI usage is driven by greater accessibility and a growing understanding of the technology's business applications. However, security concerns persist. While small business owners are recognizing AI’s benefits, they remain cautious about its potential risks. Despite these worries, there is little evidence suggesting AI itself poses a major security threat.
For instance, the 2024 Data Breach Investigations Report (DBIR) found no observed incidents linked to generative AI within its dataset, which reflects the prior year’s findings. Although generative AI has vulnerabilities and is often leveraged by threat actors to amplify cyberattacks—such as enhancing phishing campaigns or pretexting efforts—it has not yet emerged as a prominent factor in documented incidents. This underscores a key point: while concerns about the security risks of generative AI are valid, the tangible threats remain more nuanced and, as of now, less prevalent than widely perceived.
Despite these concerns, the benefits of AI for small businesses are significant. Nearly a quarter (24%) of small business owners use AI to combat cyberattacks, and 42% are considering it for cybersecurity purposes. Beyond security, AI is helping businesses save valuable time. Two-thirds (67%) of small businesses report that AI enables them to focus on their core business by automating time-consuming tasks—a 22-point increase from last year.
AI is proving particularly useful in marketing and social media. Nearly a third (30%) of small businesses use AI to enhance their marketing strategies, a 16-point increase from the previous year. With 42% of businesses considering AI for social media and marketing, this trend is likely to continue growing.
Why the technology investment uptick now?
Over the past five years, the shift to online shopping and cloud-based operations has been significant. While there has been a slight return to in-person experiences recently, the overall digital landscape remains stronger than ever. So, why did technology investment and AI adoption among SMBs see such a pronounced uptick this year?
One answer lies in the economy. Although inflation (83%) and concerns about the U.S. economy (84%) weigh heavily on small businesses, many remain optimistic about their future. In fact, 59% of SMBs believe the overall state of their business will improve in the next year. This cautious optimism could be driving the surge in technology investments—businesses are confident enough to invest but feel the need to adapt to an evolving landscape to stay competitive.
For small businesses, investing in technology is a smart move. Upgrading internet bandwidth can streamline operations, while AI can boost efficiency. Unlike larger companies, SMBs have the advantage of agility and can quickly integrate new technologies. Leveraging this flexibility will help them not only weather economic challenges but also position themselves to capitalize on emerging opportunities.
by Unknown via Digital Information World
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