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TikTok has emerged as a powerful tool for small businesses in the United States, significantly contributing to their growth and success. With its unique platform capabilities, TikTok has driven billions in revenue and provided unparalleled opportunities for entrepreneurs to reach new audiences and boost their sales. However, with the potential of an app ban looming, small business people need to weigh the pros and cons of their use of this app and how to adapt if necessary. Let’s explore how TikTok is changing the landscape for small businesses, its economic impact, and the potential challenges ahead.
The Economic Powerhouse of TikTok
TikTok's economic influence on small businesses is undeniable. In 2023 alone, TikTok contributed an astounding $15 billion in revenue to U.S. small businesses, according to a new study from Oxford Economics on TikTok’s influence. Over 7 million U.S. businesses rely on the platform, highlighting its critical role in the national economy. According to the report, TikTok has supported 224,000 jobs through its impact on small and mid-size businesses (SMBs). This job creation is a testament to the platform's role in fostering business growth and sustaining economic activity.
TikTok’s influence extends to various sectors, contributing significantly to the GDP. The food and beverage industry saw the highest contribution, with TikTok supporting $6.4 billion and 73,000 jobs in 2023. The health and wellness sector followed, contributing $3.9 billion, while the business services sector added $3.6 billion to the GDP. These figures underscore TikTok's ability to drive economic activity across a diverse range of industries.
Blake Chandlee, President of Global Business Solutions at TikTok, emphasized this impact. "Businesses across America depend on TikTok’s unique ability to help them reach otherwise unreachable customers, generate new revenue streams, and drive awareness of their brands, products, and services,” Chandlee says. “This study demonstrates what we at TikTok already knew: it's a game changer for small businesses and has a significant impact on the U.S. economy."
This growth, for many small businesses, can be credited to TikTok’s ability to help them connect with customers who were previously out of reach. Over half of small business owners report that TikTok helps them reach new customers, leading to increased sales. This ability to expand their customer base is crucial for growth and sustainability. Businesses that utilize TikTok have seen an 88% increase in sales, demonstrating the platform's effectiveness in driving commercial success.
Felicia Jackson, owner of CPR Wrap, a patented and disposable CPR template that guides anyone—trained or untrained—as they perform CPR accurately, credits the app for her business growth and survival. “I could not have done this without the help of TikTok, and I say that and I mean that, and I tell people that all the time. And best yet, two lives have been saved using our product because they saw it and bought it off TikTok.”
Jackson's story underscores the platform's role in making a meaningful impact and driving sales. She says she made “over $300,000 in just two days. I was able to pay myself, pay my employee, and hire another person—TikTok literally saved my company.”
Navigating Potential Bans and Alternative Strategies
Despite its economic success and impact, TikTok faces potential regulatory challenges, including the threat of a U.S. ban. This situation has prompted small businesses to consider other platforms like Instagram Reels and YouTube, which offer similar video-based marketing opportunities. While these platforms have different algorithms and user bases, they can serve as viable alternatives for businesses looking to diversify their marketing efforts.
The potential ban of TikTok in the U.S. has significant implications. If the platform were banned, its over 170 million users might still find ways to access it, possibly through virtual private networks (VPN). Despite being removed from app stores, experts believe that TikTok’s dedicated U.S. fan base would likely continue to use the app. According to Justin Cappos, a professor at New York University, while it would limit the app’s reach, access wouldn’t be completely cut off. Gabriel Wildau from Teneo suggests that tech-savvy individuals would likely bypass the ban, keeping TikTok alive in some capacity in the U.S. market.
“As a small business owner residing in the U.S., I’ve seen first-hand the power of TikTok’s personalized content delivery. It’s allowed us to connect with our target audience in ways we never thought possible. The potential ban is concerning because it could disrupt our digital marketing efforts significantly. We’re now exploring other social media platforms as alternatives, but the unique boost we get from TikTok will likely be hard to replace,” one small business owner told Azence.
The Need for Diversification
Businesses that rely on TikTok for customer engagement and brand visibility may find themselves scrambling or doing the “wait and see.” The ban could also potentially lead to a loss of the audience that businesses have strived hard to build on the platform, bringing all that growth to a halt. The full extent of the impact will depend on the final outcome of the legislation and how small businesses adapt to these changes.
Relying solely on social media for audience growth and engagement is inherently risky for businesses. While platforms like TikTok offer unparalleled reach and exposure, they also limit control over content distribution and audience access. Any changes in algorithms, policies, or ownership can profoundly impact businesses that depend on these platforms.
Diversifying marketing channels beyond social media platforms is essential for future-proofing businesses against unforeseen changes. Building an email list provides businesses with a direct line of communication with their audience, offering greater control over content distribution and audience access. Email marketing is highlighted as a powerful tool for businesses, offering consistent visibility to the audience regardless of size or industry.
Conclusion
TikTok has undeniably transformed the landscape for small businesses in the U.S., driving significant revenue, job creation, and providing new opportunities for growth. Its ability to connect businesses with previously unreachable customers has been a game changer, but the potential for regulatory changes underscores the importance of diversification in digital marketing strategies. As small businesses navigate these challenges, the lessons learned from TikTok's success can guide them in leveraging other platforms to continue their growth and engagement efforts. Adaptability and diversification remain key to sustaining success in an ever-evolving digital landscape.
Sources
TikTok/Oxford Economics Report
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