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How Does Social Media Impact the Development of Small to Medium-Sized Businesses?

Updated: Sep 16, 2023

The advent of the internet has brought about a revolutionary change in global communication channels, garnering widespread acceptance in society and experiencing exponential growth over the past decades. American Marketing Association scholars observed the surge in internet users to an astounding 4,356 million, accounting for 58.8% of the global population, in comparison to the 16 million users observed in 1995 (Busca and Bertrandias, 2020). On average, these 4,356M users spend approximately 6 hours and 42 minutes online daily. The significant amount of time users spend online has been directly linked to the projected 73% of e-commerce sales expected to be generated through mobile platforms (Mandal, 2017). Not only is this an increasing global industry but the United States online users currently account for 98.59% of the total population. Given the vast majority of the population engaged in online activities, social media marketing has become a high priority, with investments projected to surpass the $80 billion mark by 2025 (social media ad spend in the U.S.) (Statista, 2023).


Given the vast majority of the population engaged in online activities, social media marketing has become a high priority, with investments projected to surpass the $80 billion mark by 2025.

Stephanie Chevalier, Statista e-commerce research expert, analyzed the growth of the e-commerce industry in the United States in the U.S. social buyers 2020-2025 | Statista study. Chevalier defines a social consumer as one who completes one purchase via a social channel. This study concluded that social consumers in the United States alone are projected to grow 18% reaching 114.3 million Americans through 2025. Therefore gearing marketing and a purchasing platform toward this growing consumer segment can aid SMBs in increased purchases and higher customer retention.


With the immense growth globally and nationally in SMM, it is vital to adapt this new methodology for the sustainability of small-to-medium-sized businesses (SMBs) and the US economy. SMBs play a vital role in the US economy as they have contributed to the creation of 17.3M in the past two decades and account for 43.5% of GDP (U.S. Chamber of Commerce, 2023).


According to the article The Bright Side of Social Media: Social Media Platforms Adoption and Start-Up Sustainability by Muhammad Saeed Mujahid and Muhammad Shujaat Mubrik, there are nine critical components to start-up sustainability: having a target audience, value proposition, customer relationship for demand creation, channels of distribution, vital resources, including suppliers and commodities. SMB's early-stage failure rate of 60% is largely attributable to a lack of financial resources, competition, a technological lag, lack of business and managerial knowledge. Social media allows for the development of collaborative relationships within the start-up ecosystem that will aid in the support of sustainability and increased access to information. Given the resource-scarce nature of SMBs, social media acts as a cost-effective tool to reach various players in the market including your desired target audience. Evidence indicates that those SMBs that take advantage of social media platforms outperform competitors in sales and experience a reduction in cost most likely linked to marketing.


On the contrary, The Effect of Social Media Marketing in Small Business Performance points out a cautionary tale to start-ups. They caution that because small businesses are more focused on increasing sales to survive, they often miss out on social media marketing. Negligence of marketing, especially SMM, results in countless missed opportunities. In addition to limited marketing strategies, the study also emphasizes the impacts of misstructured SMM plans due to limited time and resources which results in inefficiency, decreased customer utility, budget, and weakens sales. The results indicated that implementing a strategy would be the most powerful indicator for SMBs. Based on this analysis, SMM prioritization, as well as a well-structured plan, leads to a positive significant statistical relationship between social media strategy and small business growth and sustainability.


The goal of SMM, if used properly through a well-constructed plan, is to reach a greater audience in a cost-effective manner. With the ever-evolving technological environment, marketing plans are dynamic in nature, so it is critical to ensure the marketing plans are catered to the current environment. SMM should be structured around consumer behavior, creative strategies, content analysis, and relevance to creating virtual brand communities (Ibrahim, 2021). The focus on these key aspects in SMM plans can contribute to increased sales volume. Furthermore, understanding current market trends and completing an annual SMM analysis report could be beneficial to ensure marketer and customer communication channels are at peak efficiency. Maintaining high-efficiency channels amongst the marketer customer channel could aid in our clients’ sustainability and growth.

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