CH 7: Entrepreneurship Case BBG 101 -- Hart
One of the biggest challenges for entrepreneurs is getting theword out about their new venture. Perhaps that's why entrepreneurshave embraced social media as a communication tool.
If used skillfully, many believe, social media can help levelthe playing field between small businesses and their giantcompetitors. David avRutick, co-owner of Folbot, a small kayakretailer, claims that without Twitter, he wouldn't have as manysales as he does. “You can't buy that kind of exposure,” avRuticksays.
Folbot competes against such household names as L.L. Bean andCabela's—there's no way the smaller company could challenge thelarger ones without widespread interactive communication. However,critics point out that social media sites vary widely in theirvalue to small businesses. “The hype right now exceeds thereality,” observes Larry Chiagouris, a professor of marketing atPace University's Lubin School of Business.
Despite the fact that the use of social media by firms withfewer than 100 employees doubled in one recent year, only 22percent of those who responded to a separate survey reported adirect increase in profits as a result of social media use, whilehalf said they broke even on the investment. Others caution thatsocial media networking eats up valuable time, particularly forentrepreneurs whose day is chock-full of tasks ranging from designto distribution and manufacturing to marketing.
Most entrepreneurs support the use of social media, but withmoderation. Chris Lindland, owner ofCordarounds.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 believespatience pays off.
Questions for Critical Thinking
How will social networking change the business environment forentrepreneurs?
How might entrepreneurs use social media to securefinancing?
