New research has shown that small businesses and entrepreneurs in the Netherlands that are very active on in social media are doing significantly better than those who are not.

Social media boosts profit

A study by market researcher TNS Nipo found that although these entrepreneurs may not have realised that their online activities lead directly to real growth, in the month before the survey they had more business, higher sales and more profit than their less-active competitors.

According to the study, businesses that were very active on Facebook and Twitter managed to increase their reach and improve customer loyalty, as well as successfully advertise online.

"Here is the nuance that success has to do above all with the innovative spirit of entrepreneurs. Not simply being active on the Internet," said researcher Martijn de Groote from TNS Nipo.

Less entrepreneurial optimism in general

These successes are one of the few bright spots, however, in relation to entrepreneurs’ reactions to the current state of the Dutch economy.

Another study by TNS Nipo of the sentiment among entrepreneurs found that they are less optimistic than they were earlier this year.

While positive-minded entrepreneurs are still in the majority, the level of optimism among them is decreasing, as the economic recovery pointed to earlier this year has not strongly materialised.

"The attractiveness of entrepreneurship is now rated just a pass in the Netherlands," says Groote. "A clear consequence of the crisis last year and a half."

Continuing economic problems

A further increase in the already high unemployment rate and continued low consumer spending are the main causes of declining optimism.

"Entrepreneurs see that consumers hold the purse strings and are still reluctant to make purchases," continues De Groote. "It's hard work in business."

While there are still positive signs, such as increases in revenue and offers, tenders and orders continue to stagnate, which affects the positivity of entrepreneurs regarding turnover, profit forecasts and sales opportunities.

A genuine bright point, however, is the huge reduction in the number of bankruptcies, which fell 33 per cent in May, the biggest monthly fall in two years. A particularly large drop was seen in the hospitality industry, where bankruptcies were halved from April.

Sources: FD, Faillissements Dossier