Yelp Reviews Impact Small Businesses

Yelp Inc. released its first-annual Small Business Pulse Survey, finding that 85% of American small businesses active on Yelp expect their revenues to grow in 2016, estimating an increase of 26% growth in the year ahead.
 
This optimism prevailed throughout the survey, with young companies leading the charge and predicting 48% growth over the next year. The “can-do” spirit of American businesses extended across a wide variety of industries, from food service, health and medicine to retail and home services. Small businesses in the restaurant industry that are active on Yelp were most upbeat about 2016, with 92% of respondents expecting an overall revenue increase.
 
Small businesses are a growing demographic of overall business owners in the United States. Small businesses represent more than 99.7%1 of all employers accounting for 55% of all jobs and 54% of sales 2  in the U.S.; and produce nearly half of non-farm private gross domestic product (GDP)3.
 
“Small businesses are an important part of the economy. They provide roughly half of all private sector jobs, and also provide direct benefits to the communities that get to enjoy their goods and services,” said Harvard University Professor of Business Administration and Yelp’s Economist in Residence, Michael Luca, an expert on how businesses influence local economies. “It’s interesting to peek into the minds of small business owners, to see how they’re feeling and what they’re thinking about. This group of businesses is clearly optimistic, which is consistent with relatively strong consumer sentiment and a recent uptick in retail sales.”
 
Despite this optimism, there is no shortage of challenges that small businesses confront. Yet, while media reports see small businesses worrying about health care costs and minimum wage compliance, Yelp’s survey shows that small businesses see developing competitive growth strategies as their greatest challenge.
 
Specifically, the top identified issues include attracting and retaining customers (60%), managing a limited marketing budget (32%) and competition from larger businesses (30%). Neither health care nor minimum wage concerns troubled small businesses as much as growing their customer bases and rising above competition. Only 18% of businesses identified time spent on non-core business elements as the main disadvantage of running a small business.
 
“Small businesses worry about their own ability to grow, even as they remain optimistic,” added Dr. Luca. “Health care and other concerns, while important, seem to be less of a problem for many small businesses as they prioritize growth.”