Entrepreneurship Case BBG -- Hart
One of the biggest challenges for entrepreneurs is getting the word out about their new venture. Perhaps that's why entrepreneurs have embraced social media as a communication tool.
If used skillfully, many believe, social media can help level the playing field between small businesses and their giant competitors. David avRutick, co-owner of Folbot, a small kayak retailer, claims that without Twitter, he wouldn't have as many sales as he does. “You can't buy that kind of exposure,” avRutick says.
Folbot competes against such household names as L.L. Bean and Cabela's—there's no way the smaller company could challenge the larger ones without widespread interactive communication. However, critics point out that social media sites vary widely in their value to small businesses. “The hype right now exceeds the reality,” observes Larry Chiagouris, a professor of marketing at Pace University's Lubin School of Business.
Despite the fact that the use of social media by firms with fewer than 100 employees doubled in one recent year, only 22 percent of those who responded to a separate survey reported a direct increase in profits as a result of social media use, while half said they broke even on the investment. Others caution that social media networking eats up valuable time, particularly for entrepreneurs whose day is chock-full of tasks ranging from design to distribution and manufacturing to marketing.
Most entrepreneurs support the use of social media, but with moderation. Chris Lindland, owner of Cordarounds.com, an online clothing retailer, advises patience. “My business has been visited millions of times, but I haven't made millions of sales,” he comments. But he believes patience pays off.
Questions for Critical Thinking
How will social networking change the business environment for entrepreneurs?
How might entrepreneurs use social media to secure financing?