Making an Impact: Technology Use Among WomenOwned Businesses in South Carolina

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1 Making an Impact: Technology Use Among WomenOwned Businesses in South Carolina November 2013

2 Women-owned businesses are a vital part of South Carolina s economy. Statewide, there are an estimated 108,300 firms owned by women with an estimated 100,300 paid employees, generating $15 billion annually in sales revenue. 1 The impact of women-owned businesses is growing fast; South Carolina ranks 11th nationally in terms of growth of women-owned businesses. 2 Broadband and broadband-dependent applications have been identified as effective tools to increase business operation efficiency, expand businesses market base, reduce cost, and improve customer service. Considering the increase of women-owned businesses in South Carolina, it is extremely important to retain and increase these businesses ability to compete globally with the help of broadband. Between April 2 and April 22, 2013, Connect South Carolina conducted a telephone survey of 800 business establishments across the state of South Carolina, including 429 privately-owned businesses that are fully or partially owned by women. This report explores how women-owned businesses adopt and use technology, as well as barriers to broadband adoption. The study finds that women-owned businesses tend to use technology at lower rates than other privately-held businesses that are not owned by women. At the same time, when women-owned businesses do adopt technology, they often use it for a wider variety of applications than other privately-held businesses in the state. Technology Adoption According to Connect South Carolina s 2013 Business Technology Assessment, 84% of privately-owned South Carolina businesses use computers, and 74% use broadband for business-related activities. Of these businesses, broadband usage and computer ownership are both significantly lower among women-owned businesses in the state (Figure 1). Among the findings from this survey: More than four out of five women-owned businesses (82%) in South Carolina use computers, and 70% of women-owned businesses in the state use broadband. Women-owned businesses are less likely than other privately-owned businesses in the state to use these types of technology. Among women-owned businesses that do not use broadband, the top barrier to broadband adoption is the belief that they can accomplish everything they need without broadband. Women-owned businesses are more likely than other privately-owned businesses to consider it important or very important for potential employees to know how to utilize social networking sites. Many women-owned businesses that use broadband do so to provide flexibility for their employees. One-third of broadbandconnected businesses owned by women allow their employees to telework, 49% enable their employees to use mobile Internet service for their work functions, and 36% either provide the necessary equipment (such as computers, laptops, tablets, or smartphones) or support a virtual private network that allows their employees to work while outside of the business establishment. On average, women-owned businesses that sell goods or services online earn $244,000 annually in online sales. Figure 1. Technology Adoption Among Privately-Owned Businesses 88% 82% 81% 70% Privately-held businesses not owned by women Women-owned businesses Computer Use Broadband Use 1 American Express OPEN, 2 Ibid 2 November 2013

3 Across South Carolina, 82% of women-owned businesses use computers, compared to 88% of privately-held businesses not owned by women. More dramatically, only 70% of women-owned businesses use broadband in their daily operations compared to 81% of other privately-held businesses. The fact that these businesses are owned by women is not necessarily the only factor behind this technology usage gap, and other issues can influence a business s likelihood of subscribing to broadband service. For example, women-owned businesses tend to be smaller than those owned by men; these smaller businesses are often less likely to subscribe to broadband service. 3 As such, to promote technology usage among women-owned businesses, it is necessary to address the specific barriers to technology adoption cited by businesses owned by women. Barriers to Broadband Adoption Among Women-Owned Businesses Among women-owned businesses that do not use broadband, the largest share (40%) reported that they do not subscribe because they feel they can accomplish everything they need without broadband service; in other words, they feel that they do not need broadband (Table 1). Table 1. Main Barriers to Broadband Adoption Cited by Women-Owned Businesses in South Carolina Our business can do everything we need without broadband 40% Our business does not use computers 16% Broadband service is too complicated 6% The monthly cost of broadband service is too expensive 5% The installation cost of broadband service is too expensive 3% Broadband service poses a security risk 1% Broadband service is not available in our area and we don't want dial-up 1% Dial-up service is sufficient for our current needs 1% The Internet would be too much of a distraction 1% Other reasons 5% Don't know/refused 21% Nearly one in six women-owned businesses that do not use broadband (16%) cited that they do not use computers as the reason why they do not use broadband. Other barriers include concerns that broadband is too complicated (cited by 6% of non-adopting women-owned businesses), the monthly cost of broadband service is too high (cited by 5%), and installing broadband is too costly (cited by 3%). In addition, when asked to rate the importance of various digital skills for potential employees to have, women-owned businesses tended to give these skills lower importance than other privately-owned businesses (Table 2). 3 Reports show that women-owned businesses tend to have fewer employees than other businesses (Source: downloads/2013_state_of_women-owned_businesses_report_final.pdf). Smaller businesses are less likely to subscribe to broadband than their larger competitors - for example, only 72% of South Carolina businesses with fewer than 20 employees use broadband, compared to 84% of businesses with 20 or more employees (Source: Connect South Carolina 2013 Business Technology Assessment). 3 November 2013

4 Women-Owned Businesses Other Privately-Owned Businesses Send and receive s 51% 61% Use a search engine 43% 54% Use word processing software like Microsoft Word 44% 51% Fill out a form or application online 32% 35% Create or edit a spreadsheet 31% 35% Use the Internet on a mobile device 26% 27% Join and participate in a webinar or teleconference 23% 24% Post information on a social networking site like Facebook or Twitter Table 2. Skills Considered Important or Very Important for Potential Employees to Have Among South Carolina Businesses 16% 12% Any of the above are important 61% 69% None of the above are important 39% 31% Among the skills listed, the only one considered important by a larger share of women-owned businesses is the ability to post information on social networking sites. This suggests that while many women-owned businesses see lower demand for broadband usage, a larger share of those businesses are embracing the ability to reach out to customers through social networking sites. Technology Use by Women-Owned Businesses Even though women-owned businesses are less likely to subscribe to broadband, those that do subscribe use their broadband connections to benefit their workers and customers, as well as their bottom line. Women-owned businesses in South Carolina are using technology to help their employees maintain their productivity while working outside of the office. One-third (33%) of broadband-connected South Carolina businesses that are owned by women allow their employees to telework. In addition, nearly one-half of these women-owned businesses in South Carolina (49%) enable their employees to use mobile Internet service for their work functions, and more than one-third of women-owned businesses that are broadband-connected (36%) either provide the necessary equipment (such as computers, laptops, tablets, or smartphones) or support a virtual private network that allows their employees to work while outside of the business establishment. Women-owned businesses in South Carolina are using broadband to stay in touch with their customers. More than four out of five broadband-connected South Carolina businesses owned by women (82%) report that they go online to communicate with their customers, and more than one-half (52%) provide customer service via broadband. For many of these businesses, social networking sites are the means they use to stay connected; over one-half of women-owned businesses in South Carolina that use broadband (51%) say they use social networking sites like Facebook or Twitter to make connections with customers and their community. Broadband also helps women-owned businesses in South Carolina benefit financially. More than three out of four women-owned South Carolina businesses that use broadband (77%) say they go online to research ways to make their businesses more efficient, while more than two-thirds of these businesses (68%) advertise their wares online. In addition, nearly one-half of women-owned businesses in the state that are connected to broadband (47%) say that they earn sales revenues from online sales. On average, these women-owned businesses report earning more than $244,000 annually from online sales. The economic benefits for these businesses will only grow as more women-owned businesses get connected to broadband. 4 November 2013

5 On average, these women-owned businesses report earning more than $244,000 annually from online sales. The economic benefits for these businesses will only grow as more womenowned businesses get connected to broadband. Conclusions Women entrepreneurs and women-owned businesses are important elements of South Carolina s growing, diverse business environment. Because they play such an important role in the state s economy, it is important to close the broadband adoption gap among women-owned businesses in the state. By advocating programs that increase digital literacy skills and help small business owners learn how they can benefit from the use of technology, South Carolina will surely see a positive return on its investment. Doing so will help South Carolina workers, businesses, communities, and the state as a whole. Methodology Between April 2 and April 22, 2013, Connect South Carolina conducted a telephone survey of 800 business establishments across the state, including 429 women-owned businesses. A business establishment is defined as a single physical location at which business is conducted or services or industrial operations are performed. Upon reaching a business establishment, the surveyor asked to speak with the person most knowledgeable about [the] organization s technology use. On average, these surveys took approximately 10 minutes to complete. Sample quotas were established by company size (5 brackets) and industry sector (8 sectors). Within these 40 cells, a randomly-drawn sample of businesses listed with Dun & Bradstreet was contacted for the survey. Altogether, this sample included 49 businesses with 50+ employees, 96 businesses with employees, 225 businesses with 5-19 employees, and 430 businesses with 1-4 employees. In cases where the respondent s information regarding the number of employees at the establishment differed from the information provided by Dun & Bradstreet, the respondent s answer was used in determining business size quotas. Each business establishment was also asked to confirm their physical location (county and state) to establish that the business establishment was physically located within the state of South Carolina. In addition to the size and sector quotas, the data were subsequently weighted using a rim weighting process to ensure that the sample was representative of all employer business establishments statewide, with targets determined according to the 2011 United States Census Bureau s County Business Pattern report, the most recent data that was available at the time the survey was conducted. The effective post-weighting margin of error = ± 3.94% at a 95% level of confidence for the statewide sample. As with any survey, question wording and the practical challenges of data collection may introduce an element of error or bias that is not reflected in this margin of error. This business survey was conducted as part of the State Broadband Initiative (SBI) grant program, funded by the National Telecommunications and Information Administration (NTIA). The SBI grant program was created by the Broadband Data Improvement Act (BDIA), unanimously passed by Congress in 2008 and funded by the American Recovery and Reinvestment Act (ARRA) in November 2013

6 Definitions 1. Broadband adopters are defined as respondents who answered yes when asked Does your company use the Internet to handle any of your business functions? AND when asked Which of the following describe the type of Internet access your company has? responded DSL, Cable Modem, Fiber Optic service, Dedicated Services such as T1 or T3, Fixed Wireless broadband through an outdoor antenna, Satellite broadband, 3G or 4G wireless service through a cellular phone network, or a similar technology. Respondents could provide multiple answers. 2. Computer users are defined as respondents who answered yes when asked Now, does your company use any type of computer technology to handle any of its business functions (for example: sales, cash receipts, accounting, inventory control or management reporting)? 3. Mobile Internet users are defined as businesses that answered yes when asked Do employees at your business use mobile Internet service on a cell phone or mobile device to handle any of their business functions? 4. Businesses that allow employees to telework are defined as those that answered yes when asked Do any employees within your organization work from home during normal business hours using an Internet connection? This is often called teleworking or telecommuting. 5. Women-owned businesses in this study are defined as those where the respondent answered yes when asked Is the owner, or are any of the owners of this business establishment, a woman? APPENDIX A: Select Sample Sizes Connect South Carolina 2013 Business Technology Assessment Sample Size All businesses 800 All businesses with broadband 604 Women-owned businesses 429 Women-owned businesses with broadband 305 Women-owned businesses without broadband 124 Privately-held businesses not owned by women November 2013