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Market4Demand's Annual Silicon Valley Survey Reveals Current Entrepreneurial Outlook
Outsourcing Trend Appears to Make Inroads with Emerging Enterprises, Regulatory Issues and Hurdles Surpass Poor Economy as Key Business Challenge
SAN FRANCISCO, Calif. — July 26, 2004 — Market4Demand, Inc., a Silicon Valley technology marketing services firm, announced results from its annual Silicon Valley entrepreneur outlook survey that it recently conducted with local technology entrepreneurs. The purpose of the survey is to assess local entrepreneurs' perspectives on the current business climate. Now in its second year, the survey reveals that entrepreneurs are still willing to tough it out while they wait for the economic recovery to take hold in the region. The sampling pool was generated from members of local entrepreneurial and technology organizations, including Market4Demand's Marketing Educational Series for Entrepreneurs (MESE), online professional connection resource for emerging enterprises, WorkIt.com, and Silicon Valley Association of Startup Entrepreneurs (SVASE).
Determination and Patience Hallmark of Group
A full 46% of participants indicated they are willing to continue with their endeavors for 1 to 3 more years even if the economy remains sluggish, while 36% are willing to continue for "as long as it takes." When asked if no economic growth in the region takes hold, 55% of the respondents indicated they would respond by expanding or growing key business areas such as sales, marketing, R&D, or operations. One notable change with entrepreneurs was related to the economy and its impact on their business. Last year, 20% pointed to the economy as a top business challenge compared to only 3% who did so this year. Taxes, licensing and other regulatory issues and hurdles surpassed the economy as one of the primary challenges to operating their business in the region.
Employment Outlook and Outsourcing
Another notable change from last year's findings was that only 36% of respondents ranked the level and diversity of available talent as chief benefits of operating their business in the San Francisco Bay Area, compared to 70% who felt this way last year. This change might be a reflection of the growing trend to outsource job functions such as engineering, customer support and marketing for cost savings. When asked about the challenges that entrepreneurs face, 50% stated that attracting key talent due to the high cost of living and high salary demands comprised the greatest challenges to operating their business. This was down from 60% compared to a year ago. The hiring outlook with this group is again favorable as 68% plan to hire over the course of this year, primarily in the areas of engineering and sales. 95% of the respondents stated that they have no plans for layoffs during the year.
"One of the most surprising findings in this year's survey is in how entrepreneurs now rank the talent pool available in the region. Previously, the level and diversity of available talent locally ranked as one of the chief benefits to operating a startup here. This year, that figure has dropped considerably," stated Sarah Autrand, founder and chief executive officer of Market4Demand. "This could indicate a trend toward outsourcing at emerging enterprises. Early stage companies are much more conscientious in finding ways to conserve capital."
Changes in Funding Atmosphere
With respect to funding, over 53% of participants said that they were not seeking funding alternatives outside of private equity placements, while 47% were looking at alternative funding options-down from 63% compared to last year's survey. This change is likely due to the increased funding activity and competition within the venture community, resulting in valuations becoming more attractive for founders. 33% of respondents said they found it easier to get in front of investors today as compared to 2001, 2002 and 2003.
Outlook for Marketing Function
In terms of marketing initiatives, Internet marketing, including search engine marketing and website development, measurement and maintenance is attracting the largest allocation of marketing dollars among emerging enterprises. Over 23% of respondents stated that website activities were the number one single funding choice. In addition to lead generation programs, top priority marketing activities being funded this year include events and partner programs. Advertising and print collateral fared poorly with only 7% and 8% of respondents planning to allocate budget to these vehicles, respectively. 41% of companies surveyed are contracting out or outsourcing the bulk of their marketing infrastructure and headcount in 2004, with only 15% hiring or maintaining in-house marketing departments.
About Market4Demand
Market4Demand, a technology marketing services firm located in San Francisco, delivers strategic and tactical marketing services that help increase shareholder and customer value. Market4Demand specializes in marketing planning and implementation, interim marketing management, and marketing communications. The company offers expertise in both enterprise and consumer technology solutions. In 2001, it launched Market4Demand's Marketing Educational Series for Entrepreneurs (MESE), a sequence of workshops developed to empower entrepreneurs with practical, value-based technology marketing best practices. For more information about Market4Demand's services and Market4Demand's Marketing Educational Series for Entrepreneurs (MESE) visit www.market4demand.com.
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