Microsoft Family Business Survey Reveals Conflict in Family-Owned Businesses

REDMOND, Wash. — June 21, 2007 — Technology is critical to the current and future success of small family businesses, especially for those with higher revenues and younger owners. However, six in 10 business owners with multiple generations working in the business say there have been disagreements between older and younger generations about how to invest in technology.

Those findings and much more about small businesses and the use of technology were uncovered by Microsoft Corp. in a telephone survey of 252 small-business owners recently conducted on behalf of the company by KRC Research.

One question asked was whether respondents agreed with the following ways technology helps small family businesses:

  • Increase the efficiency of our operations (79 percent agreed)

  • Grow the business (74 percent agreed)

  • Provide better customer service (74 percent agreed)

  • Improve the quality of our image or product (70 percent agreed)

  • Stay competitive with bigger businesses (68 percent agreed)

  • Gain an advantage over our competition (68 percent agreed)

“Sure, we’ve had disagreements over investing in technology upgrades, and to tell the truth, I’m not exactly thrilled about spending money for the latest and greatest technology if it isn’t going to directly impact the bottom line,” said Adam Williams, owner of ROI Marketing Services, a consulting firm in Memphis, Tenn. “The challenge to my son, who always thinks we need the latest gadget, is to prove to me that the investment in technology will help the business grow. If there is a positive return on our investment, I’ll listen.”

Sanford Story, owner of A&E Automotive in Goleta, Calif., knows that he has to keep pace with automotive industry technology or he will be left behind by competitors. “I’m not really that interested in technology, and I’m cautious to invest in upgrades. But I know that I really don’t have much of a choice if I want to keep up with the competition,” he said. “My lead technician has been a big proponent of technology because of the advances in the automotive industry. He says if we don’t stay current with the rest of the industry, we’ll fall behind.”

Eddie Yandle, a senior director of the Worldwide Small and Midmarket Solutions and Partner group at Microsoft, agrees that technology has been a greater responsibility and passion for the younger generation in small family businesses. “The survey did reveal that seven in 10 owners with multiple generations working in the business said that the younger generation is more enthusiastic about technology than the older generation,” he said. “In addition, two out of three owners agreed that technology is a good way to attract younger generations into their companies.”

More than three in four owners reported that technology is important to sustaining their business, including 52 percent who said it was very important or extremely important. When it comes to growing the business, technology is rated almost as important, with seven in 10 rating it as important, including 48 percent who said it was very important or extremely important. More than seven in 10 agree that investing in technology is an important part of keeping their business strong and competitive.

Those who make their living by helping small businesses make the right technology investments find that the first step is often the hardest. “Over the years, I’ve found that when it comes to past investments in technology, small-business owners have been very satisfied with the investment, and that technology has helped several parts of their businesses,” said Ed Lohman of Affordable Computing Enterprises in Havre, Mont. “Technology, from operating systems and software to computers and mobile devices, has truly changed the way small business does business.”

That’s particularly true for Lohman’s fellow Montana resident Darrell Norman, owner and founder of Lodgepole Gallery and Tipi Village near Browning, Mont. According to Norman, whose business incorporates a Native American art gallery, bed-and-breakfast, and access to a fishing camp and horseback riding stables located on the Blackfoot Indian Reservation, technology has made a huge difference in his business volume. “There are as many computers out here as there are TV sets,” he said. “Technology has vastly improved my business through our international Web site and being able to develop brochures and ads, digital art, and imaging on our computers.”

Yandle agrees that technology can provide a big advantage to small businesses, even when the business is in a remote location such as Lodgepole Gallery and Tipi Village. “Technology is the great equalizer for small business and even more so for businesses that may be isolated geographically,” he said. “Having a presence on the Web puts your company in front of so many more prospects than you could ever reach otherwise in an efficient and economical way.”

Small family business owners get advice on technology from a variety of sources, including friends and family (29 percent), professional colleagues (24 percent) and technology consultants, retailers or manufacturers (24 percent). Owners who get information from technology sources are more likely to be satisfied with their investments in technology (95 percent satisfied) than those who get information from colleagues (88 percent) and friends and family (75 percent).

The survey showed that 83 percent of small-business owners said they were satisfied with recent technology investments. Satisfaction was especially high among the youngest owners and those with the highest revenues. Satisfaction was at 93 percent for owners under age 50 versus 78 percent among owners age 50 to 64, and 67 percent among owners age 65 and older. Likewise, satisfaction was highest (92 percent) among companies with the highest revenue.

The predominant technologies in small family businesses, according to respondents, are Internet access and personal desktop computers. Seventy-eight percent of small family businesses have Internet access, and three in four have a PC. Companies with six or more employees are more likely to have Internet access (90 percent) than those with fewer employees (77 percent).

The age and revenue factors come into play again with regard to their reliance on mobile technology, with 76 percent of younger respondents and 79 percent of higher-revenue businesses depending on wireless devices.

When it comes to spending on technology, small family business owners are most likely to spend the biggest slice of their budgets on hardware such as PCs and laptops and industry-specific software. Companies that are increasing their tech budgets in 2007 are more likely to be buying PCs (49 percent) than those companies whose budgets will remain the same (32 percent) or those spending less than they did last year (27 percent).

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

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