Yahoo Small Business Report Shows Increasing Tech Complexity a Major Hurdle for Microbusinesses

3 min read · 9 months ago


by Chris Wayne, managing director for Yahoo Small Business, Verizon

Many small businesses are turning to technology to help grow their businesses. But far too often, they are presented with sprawling digital software marketplaces that offer disconnected solutions and unclear choices, which often results in the adoption of products that just aren’t the right fit.

In our Yahoo Small Business 2021 Microbusiness Outlook Report, we found that a staggering 63 percent of microbusiness (businesses with five or fewer employees) owners reported investing in technology for their business that ended up not being the right fit. Moreover, 48 percent said they’ve experienced this more than once.

These types of missteps can be a distraction at best, but even worse, they can result in lost time and revenue and may even discourage early stage business owners from adopting technology that is key to helping them grow in the future.


Software platform “bloat” and its impact on small business owners

There’s no denying that Software as a Service (SaaS) has been a game changer for small businesses. It’s opened the door to new business models, increased efficiencies and improved services. However, while this has no doubt led to new opportunities, the proliferation of SaaS services has also caused increased complexity.

While SaaS solutions make it easier for small businesses to get everything they need to run their business on demand, the increasing number of software services they rely on to do business has left many small businesses struggling to manage this increasing complexity. In many cases, they are managing multiple apps, logins, and passwords, which often has unintended consequences such as incompatible systems and data silos.

Our survey found that 85 percent of microbusiness owners use software platforms to support their business needs, but 30 percent are juggling 3 or more—adding complex and unnecessary IT burdens to entrepreneurs. And the number of platforms grows as businesses do. While 79 percent of microbusiness owners with no employees use 2 or fewer platforms, just 67 percent of those with employees say the same; instead, a third of microbusiness owners with employees (33 percent) are managing 3 or more platforms. Instead of helping to drive growth, this platform bloat could threaten to hold microbusinesses back from expanding.


Increasing desire for a “one-stop shop”

For small business owners who are not tech savvy, researching and selecting a solution for tasks like building a website, managing accounting and payroll, and marketing their business can lead to significant challenges. Many lack the time and patience for tech challenges. Our survey found that nearly 3 in 5 microbusiness owners (57%) decide whether software they’ve purchased is the right fit in one month or less, highlighting a further need for these business owners to have access to the right technology tools at the right time to support their needs.

Faced with these challenges, most microbusiness owners (57 percent) say they would prefer an all-in-one software platform with a suite of business tech tools over leveraging individual software tools for different business services (43 percent). By working with a trusted technology partner to take a one-stop-shop approach, small business owners feel confident that they are getting access to tools that have been brought together to meet their specific needs, as opposed to having a wide array of tools and vendors to choose from which can be overwhelming and increase the chances of selecting a technology solution that is not the right fit.

Starting a business can seem intimidating, and the number of different technology solutions available to entrepreneurs makes launching and managing a business even more challenging. Having a curated list of the best services to leverage for different aspects of business management can make all the difference for budding and established entrepreneurs and small business owners.


Survey methodology

The findings of the Yahoo Small Business 2021 Microbusiness Outlook Report are based on a survey fielded in May 2021, which yielded responses from 1,000 U.S. business owners with five or fewer employees in the United States.