Small Business Information Needs Assessment Survey

Summary

Small Business Information Needs
Assessment Survey
Report to Industry Canada
February 2001
COMPAS Inc

Multi-Audience Research
Ottawa and Toronto
Contents
Executive Summary ..................................................................................i
Introduction.............................................................................................. 1
Research Design.................................................................................. 1
Business Characteristics of Participants.............................................. 4
Key Characteristics ........................................................................... 4
Other Business Characteristics......................................................... 9
Respondent Characteristics............................................................ 11
Business Challenges and Opportunities ............................................ 13
Information Needs and Sources ........................................................ 18
Awareness and Use of Government Information Services ...................27
Internet Usage.................................................................................... 34
Information Preferences..................................................................... 38
Small Business Information Needs Assessment Survey:
A COMPAS Report to Industry Canada
Executive Summary
♦ Industry Canada commissioned COMPAS to conduct a survey of managers
and operators of small businesses in Canada (defined as under 100
employees). The purpose was to better understand the needs, particularly
information needs, attitudes and behaviours of small businesses, including
their main sources of information and preferred delivery methods

♦ In total, 1,000 interviews were conducted with business owners and senior
managers in January-February 2001. After quotas were set to provide for
sufficient interviews in certain business sizes and regions, the results were
weighted to ensure that they were representative of the small business
community in Canada (using data from Statistics Canada’s Business
Registry)

Business Challenges and Opportunities
♦ Growth-related issues were identified as the most important issues or challenges
facing small businesses at this time. This includes attracting new customers (11%),
general growth issues, including how to grow (9%), access to capital and financing
(9%), recruiting new employees (8%) and managing growth (4%) (multiple
responses accepted). Competition was also identified with some frequency (13%)

♦ 88% said that growth or expansion over the next few years was important to their
business (55% said very important). Only 13% acknowledged that growth is not
important to them

♦ When participants were asked to rate a number of potential issues or challenges in
terms of their importance to their business (7-point scale, 1 = not important at all, 7 =
very important), employee-related issues topped the list and appear to dominate the
thinking or focus of small businesses. Three of the top four challenges involve the
retention, recruitment and training of employees:
q 73% identified keeping or retaining valued employees as important

q 62% training and skills development

q 58% recruiting new employees with the skills needed

q 57% government regulations and the cost of compliance

q 52% access to financing and capital

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Small Business Information Needs Assessment Survey:
A COMPAS Report to Industry Canada
Fewer than half identified two technology-related issues as important:
q Technology issues in general (i.e. adoption and use of tech.) (48%)

q Development and use of e-business (30%)

Information Needs and Sources
♦ When asked to rate various information sources in terms of their importance to their
business as a source of business information (7-point scale, where 1 = not important
at all, 7 = very important), business managers pointed most often, by far, to ‘informal’
sources – their clients, suppliers and colleagues:
q 86% identified clients as important (most say very important)
q 73% suppliers
q 56% business managers and colleagues
♦ Business managers were divided in terms of the importance of three other potential
sources – banks and other financial institutions, industry or trade associations, and
the media. Approximately equal numbers view these as important and unimportant

For all other potential information sources, more people gave low ratings than high
ones. Private sector consultants ranked lowest. The federal government, the
Internet, and provincial governments rated slightly higher, but are nevertheless seen
to be sources of information with little or no importance to more than half of the small
businesses

♦ Small business managers were divided in terms of how well the information they
obtain from their various sources meets their needs as a business operator: 32%
feel that their current sources perform well (scores of 6-7 on 7-point scale), slightly
more than one-third were only moderately satisfied, and one-third offered relatively
poor assessments (scores of 4 or less)

♦ When asked how active they were, as a business, in looking for information to help
them address the challenges and opportunities facing them, business managers
were moderately positive. Almost 40% consider themselves to be relatively active
(scores of 6-7 on 7-point scale). In total, two-third gave themselves a positive self-
assessment in this area. At the other end of the spectrum, almost one-third offered
neutral or negative scores on the scale

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Small Business Information Needs Assessment Survey:
A COMPAS Report to Industry Canada
♦ Most ‘types’ of information were seen to be moderately important. When rating
various types of business information in terms of their importance to their business
(7-point scale, where I = not important at all, 7 = very important):
q 68% identified information about their industry or sector as important

q 67% pointed to innovation

q 62% management skills

q 62% business trends

q 59% benchmarking

q 58% new technologies

q 52% access to capital and financing

q 52% wages and salaries

Business managers were almost equally divided over the importance of information
about government services to business, while just over one-third considered labour
market information (LMI) to be important. Over two-thirds considered information on
international markets to be unimportant

♦ Most business managers think they know where to go if they need business
information. However, few look to government. When asked to express their level of
agreement with a number of statements using a 7-point scale (1 = strongly disagree,
7 = strongly agree):
q 63% were confident that they know where to go for information if they need it
Moreover, 45% felt quite strongly about this (scores of 6-7). Almost one-quarter
disagreed

q 50% do not really think of government as a provider of useful business
information. At the other end, one-third disagreed with this statement, indicating
their view that government does come to mind as a source of useful information

Slightly more people agree than disagree that most of the information they receive
does not apply to them, and people are split between those who find it difficult to
keep up with what they need to know and those who do not, with many in the
middle

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Small Business Information Needs Assessment Survey:
A COMPAS Report to Industry Canada
Awareness and Use of Government Information Services
♦ Almost one-quarter (23%) of small businesses have contacted the Government of
Canada in the last year for information or assistance for their business. This does
not include contacting the Canada Customs and Revenue Agency, previously
Revenue Canada, about taxation, the GST or similar matters

♦ Managers of businesses that have contacted the federal government cited access to
financing or capital as the main type of assistance they were seeking (19%). Also
identified with some frequency were labour market information (14%), sector-specific
information (12%), and salary/compensation information (11%)

♦ By a wide margin, small businesses sought the government assistance/information
they needed by phone (57%). Used with diminishing frequency were the Internet,
including email (19%), printed material, such as brochures or publications (19%),
and fax (14%). Relatively few dealt with the federal government in person (10%) or
by mail (7%)

♦ Small business managers that obtained information from the federal government
offered moderately positive assessments of the information they received. Almost
two-thirds (63%) rated the information as good or very good in terms of its value or
usefulness. Near-identical ratings were offered in terms of the clarity and ease of
understanding of the information

♦ One-third of small business managers claimed to have heard or read about Canada
Business Service Centres. Only 16% of those who claimed to have heard about
CBSCs said they have used any of their products or services

♦ 13% of business managers said they have attended a small business info-fair. Only
4% have used the services of a federal government economic development agency

♦ One-third of business managers claim to be aware of federal government websites
that provide business-related information. Of those who claimed awareness, almost
half (48%) could not identify any sites. Specific Government of Canada websites
were identified very infrequently

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A COMPAS Report to Industry Canada
Internet Usage
♦ Business managers indicated a relatively low level of use of the Internet by their
businesses. Fully 45% said they do not use the Internet at all for business purposes,
while about half of the rest report only minimal usage. Only one-quarter provided
scores above the mid-point on the scale (7-point scale: 1 = use not at all; 7 = a great
deal)

♦ Managers of small businesses that use the Internet at least a little (i.e. all but scores
of 1-2) were asked to identify which of a number of things their business has done
using the Internet during the past year. Despite the low level of overall use of the
Internet by small businesses, the range of activities they undertake via the Internet is
relatively varied:
q 83% have used it to look for business information

q 77% have communicated with clients

q 50% have bought products or services, while 33% have sold them via the
Internet

q 50% have visited government websites

q 16% have used on-line recruitment or employment services

♦ Managers of small business that look for business information on-line were asked to
identify the sites they visit most often to try to find useful information. In response,
they pointed most often to trade/industry-related sites (16%) and supplier sites
(15%), followed by search engines (10%) and government sites (9%) (multiple
responses accepted)

♦ Almost two-thirds of business managers that look for business information on-line
said they are always (12%) or often (51%) able to find the information they need

Few said that this is rarely or never the case. Those who have visited government
sites were asked the same question. Here, 45% said they always or often find the
information they need from government sites

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Small Business Information Needs Assessment Survey:
A COMPAS Report to Industry Canada
Information Preferences
♦ In line with the relatively low use of Internet use, business managers express a clear
preference for printed material (40%) including mail (37%), as their preferred way to
receive business information (two responses accepted). One-third (32%) prefer the
Internet. Also mentioned with some frequency were fax and the telephone

♦ Asked directly about whether they prefer receiving information electronically or in
hard copy, business managers express a strong preference for hard copy (78%)

♦ The small business community is somewhat divided between majority preference for
receiving information on a pro-active basis (55%), and a considerable minority that
want it only when it has been requested (41%)

Conclusions and Implications
The portrait that emerges is one of a business community focused on growth. While
managers point to a range of items when identifying the top issue or challenge facing
their business, growth-related issues overshadow others. This includes attracting new
customers, better understanding how to grow, access to capital and financing, recruiting
new employees and managing growth. When asked directly, business managers
confirmed a strong growth pre-occupation. In short, the small business community is
clearly focused on growth, directly so for most, more peripherally for many of the rest

Employee-related issues – ensuring that their business retains, recruits and
develops the skills it needs – are also an area of central concern for many businesses
(and of moderate concern to many others). Technology issues, particularly e-business,
are of much less importance to many firms

The implications for product development is that information products and services
that help small businesses deal with growth and address their employment challenges
can be expected to be of interest to many businesses

In terms of information sources, business managers look most often to ‘informal’
sources – their clients, suppliers and colleagues. That this should be so points to the
informal nature of the information itself that business seems to value most. Information
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Small Business Information Needs Assessment Survey:
A COMPAS Report to Industry Canada
and learning from clients, suppliers and colleagues often comes through personal
contact, whether by phone, in person, or email. Such sources are less known for
offering access to articles, reports or ‘information documents’ in other form

Much lower down were governments. Both the federal and provincial levels were
seen to be important as sources of useful business information by about one-third of the
businesses. For most of the small business community, government is not on the radar
screen when thinking of business information

The current information sources and patterns of behaviour appear to be serving the
needs of small businesses only moderately well. A significant portion express doubt
about the sufficiency of their current information habits and venues, including a third that
think they serve poorly. This suggests that many small businesses would be open to
considering new information providers. Reinforcing this is the majority preference that
was expressed for receiving information on a pro-active basis (presuming it is of value
to them). (In marketing terms, messaging might ‘play’ on this doubt, asking businesses
to look at the adequacy of their current sources of business information, and inviting
them to take a look at what the federal government provides)

Most managers see themselves as fairly active in terms of seeking out business
information to help them with the challenges they face. However, fewer than half see
themselves as truly pro-active, and almost one-third offered moderate-low to poor self-
assessments. The community appears to be quite segmented in terms of its effort in
looking for needed information

Most managers also feel they know where to go for information if they need it, with
half expressing strong confidence in this. One-quarter disagreed, and are not confident
they know where to go

Relatively few of those looking for information would turn to government to provide
it. Half expressed agreement that they “don’t really think of government as a provider of
useful business information” (one-third view government as a source of useful business
information)

The extent of the challenge Industry Canada faces is evidenced in the contrasting
proportions of business managers that attributed moderate-to-strong importance to
innovation information (66%) and the handful (2%) that contacted the government in the
past year for such information. This against a backdrop where one of the federal
government’s main communications themes targeted to business is about innovation

Another less central point of comparison is the three percent who contacted government
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Small Business Information Needs Assessment Survey:
A COMPAS Report to Industry Canada
about management skills development and the 62% who view such information as
moderately or very important to their business. Small businesses are not coming to
government for business information of importance to them

Small businesses exhibited a moderate level of interest in most types of information,
albeit in varying degrees. Compared to other rankings, there was a much more gradual
decline in terms of the value attributed to the items. While interest in industry/sector and
innovation information was highest, this was followed closely by information about
developing management skills, business trends, new technologies, access to capital
and benchmarking

The relatively high level of interest in information about new technologies should be
seen in light of the lower priority focus given to this issue in general by small businesses
(recall the low ranking of this item when respondents rated issues/challenges facing
their business). As well, the lack of importance of e-business to most small businesses
suggests that businesses are not looking here when thinking about technology or
innovation information (two of the top three ranked information types)

Access to financing or capital topped the list of reasons why businesses contacted
the federal government. It is noteworthy that many small businesses look to government
as a source or conduit of funding, not information. This is a paradigm of government
relevant to Industry Canada, where the department itself has moved away from direct
funding to the provision of information

When small businesses do come to the federal government for information or
assistance, most come away satisfied with what they receive. That said, a significant
minority do not. This underscores the need to provide quality information products and
services to small businesses that do turn to government for support. One would expect
that the large minority that were less than satisfied would be more reluctant to return to
government to address their information needs

The data suggest a relatively low level of use of the Internet by small businesses

Not only do almost half the population say they don’t use it at all for business purposes,
approximately half the rest report only minimal usage. This suggests that the relatively
high levels of Internet access reported by small businesses here and elsewhere may
overstate the volume of business activity actually pursued on-line by small businesses

Despite the low level of Internet use, the range of on-line activities undertaken by
businesses is relatively varied. Fully 70% have undertaken three or more of the on-line
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Small Business Information Needs Assessment Survey:
A COMPAS Report to Industry Canada
activities we explored, led by looking for business information and communicating with
clients, and including buying and selling products or services over the Internet

In terms of how they would like to receive information, business managers express
a clear preference for printed material, including mail (one-third prefer the Internet)

When asked directly, managers express a resounding preference for hard copy over
electronic information

This speaks to the challenge facing the department in terms of providing electronic
information products to a small business community that exhibits a low level of Internet
use, does not look to government for business information, and has a clear preference
for printed material over electronic. The reliance of small businesses on the phone when
turning to government for information or assistance, combined with low awareness and
use of federal websites, underscore this challenge. Only one-in-five used the Internet,
including email, to contact the federal government (similar numbers for printed material
and fax)

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Small Business Information Needs Assessment Survey:
A COMPAS Report to Industry Canada
Introduction
Industry Canada commissioned COMPAS to undertake a survey among managers
and operators of small businesses in Canada. In the summer of 2000, the department
conducted qualitative research to assess the needs of the small business community in
order to guide the development of new information products and services. That study
was Phase One of the department’s research efforts in this area. This survey represents
Phase two

Industry Canada wished to proceed with a quantitative survey to validate the
findings of Phase One. Objectives included:
q To better understand the information needs, attitudes and behaviours of
small businesses, including their main sources of information and
preferred delivery methods, and
q To obtain target-market feedback to support the development of web-
based information products

Research Design
The following specifications applied to this research:
q A total of 1,014 interviews were conducted by telephone across Canada
with small business owners, managers, or operators between January
19 and February 1, 2001. Interviews averaged 17 minutes in length

q Based on a sample of this size, the overall findings can be considered
to be accurate within +/- 3.1%, 19 times out of 20 (most conservative
estimate)

q The sample for this study was drawn from the population of Canadian
businesses with fewer than 100 employees

q A mix of sectors was included in the sample in relative proportion to
their distribution in the small business community

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Frequently Asked Questions

What is a business needs assessment survey?

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