Doom and Gloom: How Real is it?

I’ve run across yet another survey that claims to demonstrate “small businesses are rapidly cutting overhead costs to adjust to the new reality of a slowing economy.” Among other findings in this survey:

  • 75% of small businesses negatively impacted by the current economy
  • 72% are reducing overhead costs
  • 50% are cutting back on business services
  • 23% getting rid of physical office space

Overall it paints a picture of small businesses heading for the lifeboats – but how much can we tell about the reliability of this picture?

Not a whole lot, as it turns out. This particular survey was performed by RingCentral, a hosted phone service for small businesses. They provide a variety of virtual PBX plans, toll free numbers, multiple extensions, faxing, and similar services. While their feature summary is impressive, the reliability of this survey is somewhat less so: it was compiled as an online survey among their customers.

It stands to reason that companies investing in a virtual PBX system are likely to self-select towards companies trying to reduce their overhead costs. This is analogous to a restaurant surveying its customers to ask if they ever eat meals outside of the house. This selection bias doesn’t say anything strong in this particular case about whether the survey results can be extrapolated to a wider class, say all small businesses in the country – but it does give a good reason to be suspicious of the results.

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