Is TikTok Good for Small Business? (5 Reasons TikTok Can Boost Success & Profits)

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Is TikTok Good for Small Business? (5 Reasons TikTok Can Boost Success & Profits)

June 21, 2024

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TikTok is good for small business. It’s rapidly growing into one of the most used social media platforms. According to Hootsuite, TikTok takes the #1 spot for most downloaded app in over 40 countries. Plus, it’s not just a platform where Gen Z’s enjoy entertaining videos anymore. A study by Statista found that 71.2% of people on TikTok have bought a product they saw on their feed. Another survey saw 30% of daily TikTok users utilize the TikTok Shop.

TikTok is a useful platform for small business exposure. There are many opportunities to get your brand in front of a wide audience. For example, the platform’s algorithm promotes content based on engagements rather than followers. So even with a new or small account, you can go viral if your videos resonate with viewers. Here’s what someone from Reddit has to say:

Another great exposure example is making use of trends. Tapping into popular trends and hashtags can greatly increase visibility and engagement. This will then attract more followers and potential customers.

Brooki Bakehouse is one small business that took off in TikTok. Brooke Saward, the owner, shared fun baking videos and a bit about her personal life. These videos garnered millions of views over time. Today, the bakery has almost 2M followers, lots of faithful customers, and even a bakery class. Brooke says that she never spent a single dollar on marketing. Here are some other success stories from Reddit:

TikTok is a good way to start a business in the creative and entertainment sectors, as well as in lifestyle, education, and technology. It comes with direct sales features, such as TikTok Shop and links to product pages. This makes the purchasing process much easier for customers, potentially increasing sales. However, it does require a bit of work. For one, you must post interesting and engaging videos at least 1 or 3 times a day. Also, competition is getting tougher as small and big businesses are joining in the fun. You need to find a way to stand out. Finally, not all types of businesses do well in TikTok. You'll have to study your target audience and their presence in the app. Here is what one person from Quora has to say:

In this article, we're going to see 5 reasons why TikTok is good for your small business. We'll also look at tips on how to leverage the app, as well as its benefits and drawbacks.

1. TikTok Has Massive, Specialized Reach and Engagement

TikTok has massive, specialized reach and engagement due to its millions of active users worldwide. Plus, its algorithm promotes highly engaging and personalized content. This makes it easier for a wider audience to discover your small business. At 13 years old, Dasha Derkach posted a video on the TikTok app about her scrunchie designs. On that same day, she says 10 people messaged her to order. In 2 months, the video garnered 15k views with 100 orders a week! Today, TikTok provides 90% of Derkach’s Enchanted Scrunch sales.

TikTok impacts small business visibility as it shows content tailored to users’ interests. So even if you have no followers, your video can still appear to people interested in what you offer. You can then turn them into customers with creative and authentic videos.

2. TikTok Can Gain Viral Potential

TikTok can gain viral potential because of its high user interaction. A study by Social Insider found that the average engagement rate per view on TikTok is 5.38%. If you get a lot of engagement, the video will become viral and reach even more people. To make a small business go viral on TikTok, you can:

Create engaging content. When it comes to small businesses in TikTok, people prefer real, unpolished videos over highly produced content. A Nielsen survey saw 53% of TikTok users trust brands that are authentic. Storytelling is also a great way to capture attention and engagement
Participate in TikTok trends and challenges. Taking part in the latest trends or challenges is one of the best ways to appear on people’s For You Page (FYP)
Use popular hashtags and sounds. Hashtags help categorize your content, making it easier for users to discover. Similarly, users often search for videos using specific sounds or music
Engage with your audience. Responding to comments not only boosts engagement but also builds a community
Collaborate with influencers. TikTok influencers have a significant influence on their audience. If you partner with them to promote your products, you’ll become popular with their followers. Many of them will be willing to buy your items, too
Keep your videos concise and to the point. Since 25% of TikTok users are 10-19 years old, their attention spans tend to be shorter. So the ideal length for videos is between 15 and 60 seconds
Pay for TikTok ads. The advertising options allow your videos to reach highly potential customers. You can choose from In-Feed Ads, Branded Hashtag Challenges, or TopView ads
Post consistently. For better chances of going viral on TikTok, maintain a consistent posting schedule

3. TikTok Is Highly Cost-Effective

TikTok is highly cost-effective as it doesn’t cost anything to post creative videos. You don’t even need expensive equipment to make content that resonates with an audience. Lala Hijabs, one business that started and grew in TikTok, simply used a phone, good lighting, and tie-dyed hijabs.

However, to make your TikTok videos seen by more people, you’ll want to invest in TikTok ads. The cost for this can vary, depending on the type of ad you choose. Even so, it’s still much cheaper compared to other types of content marketing. For example, the Cost Per Mille (CPM) in TikTok is $10, while the CPM in Facebook is $14.9. NestScale provides a detailed graph of the different TikTok ads and their costs:

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4. TikTok Offers Targeted Advertising Options

TikTok offers targeted advertising options that can accurately reach the right audience. You can choose to target users by demographic, interest, or behavior. You also have an option to advertise to your previous customers. You may even put out an ad to find new users who are similar to your existing customers. TikTok is a good platform for small business advertising as it has several types of ads:

In-Feed Ads. These appear in the target audience’s “For You” feed. It blends seamlessly with organic content
TopView Ads. These come up when users first open the app. It ensures maximum visibility
Branded Hashtag Challenges. This is a sponsored hashtag that creates a challenge and pushes users to participate in it
Branded Effects. This creates a brand sticker, filter, or special effect that users can apply to their videos
Branded Takeovers. These are full-screen ads that appear when users first open the app. It features images, GIFs, or videos with embedded links

5. TikTok Is Popular Among Younger Audiences

TikTok is popular among younger audiences who are willing to try out new products and brands. In a 2021 Consumer Culture Report, it was discovered that 58% of Gen Z’s purchased an item they saw on social media. One example of a product going viral on TikTok is the Gummy Mango peelable candy. Since the gummy can be peeled, it made for a great video review that piqued interest. Soon, more and more teens and young adults bought the product to video themselves trying it. Ever since then, stores like Walgreens have had trouble restocking it.

A huge young audience makes TikTok a good platform for small business promotion. This is because engagement and trendsetting are popular among the younger generation. Both of these can boost visibility and influence purchasing decisions.

What Are the Benefits of Using TikTok for Marketing a Small Business?

It can reach a massive and diverse audience. TikTok has over a billion active users. Half of these users are willing to buy products or services in the app. In fact, TikTok is the second most popular platform where Gen Z makes purchases
It doesn’t matter how many followers you have. TikTok promotes content based on engagement rather than followers. With this, even the smallest business can achieve viral reach
It doesn’t cost much. TikTok relies more on creativity than production quality. You don’t need to invest in expensive equipment to see success. You can even get lots of views, likes, and shares without spending a single penny on ads.
It’s a fun way to advertise your business. Taking part in trends, challenges, sounds, and effects adds a playful element to your marketing strategy. All this can attract the younger generation of consumers
It promotes influencer collaboration. TikTok ranks as the third most popular social media platform for influencer marketing. The TikTok influencer gets video ideas, while the TikTok marketer taps into their pool of followers
It allows you to humanize your business. The informal nature of TikTok can showcase the human side of your business. You can use it to share personal stories, team member highlights, day-in-the-life, etc… This can create a deeper emotional connection with your audience
It drives traffic and sales. “Link in Bio” and “Shop Now” buttons make it easy to direct traffic to e-commerce sites or landing pages
It builds a community. High interaction and engagement foster a sense of belonging and loyalty. Whenever your audience needs something you offer, your business will be the first one they go to
It provides data-driven insights. You’ll be able to get detailed insights on video performance, audience demographics, and engagement metrics. You can then use this data to understand what content is best to put out
It gives you real-time feedback and adaption. Comments, likes, and shares, will help you gauge the audience's reactions. It'll then be easier to adapt to a content strategy that meets their preferences

Success Stories of Using TikTok for Small Business

Bobbie Goods is an artist who found success in TikTok. The funny part is that she didn’t plan on turning her TikTok content into a business. Goods only made it to show off her charming animal hand drawings with music to match the vibe. As her following started to grow, and more people messaging her about orders, she decided to sell her art. Now, Bobbie Goods sells coloring books, stickers, artsy bags, and cards. She has 1.1 million followers on TikTok, thousands of views, and frequently sells out her products.

Small business in TikTok success stories

You can find success with TikTok dropshipping, too. Someone from Reddit was excited to share their success story. Since their niche was beauty, they aimed to attract TikTok's predominantly young female audience. After investing $800 in TikTok ads, they were able to earn $2,600 in just 48 hours. Here is what they had to say:

Small business in TikTOk success stories 1

Crumbl Cookies had a unique strategy to get people raving about them. Every Sunday, they rotate their menu and drop new flavors. They then post their drool-worthy cookies on TikTok. Creating a sense of FOMO, thousands of people rush to get the cookies before they're gone. They also encouraged customers to use the hashtags #crumblereview and #tasteweekly in TikTok. With this, Crumbl Cookies reached 1 million followers in a few days. Today, they have almost 8 million followers and even more views on their hashtags. What began as a small bakery in Logan, Utah has now grown to over 800 stores. Crumbl Cookies is known as the fastest-growing cookie company in the USA.

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Is TikTok Useful for Business?

TikTok is useful for business if your goal is to reach a younger audience. Almost half of the users (47.4%) are under 30 years old. What’s more, TikTok is a great place to show your business’ creativity and authenticity. So if your small business is in the creative industry, it’s especially useful to have a TikTok account. Here’s what someone from Reddit has to say:

However, TikTok is not for all businesses. If your target audience is older or more serious, you won't find many of them flocking to the playful app. In this case, TikTok might just be a waste of your time. Here is what another user says on Reddit:

To determine if TikTok is useful for your business or not, you should study where your target audience is. If they can be found on TikTok, then it’s a must to be present there. To give you a heads up, here are some TikTok demographics by Exploding Topics:

5 Expert Tips to Leverage TikTok for Small Business

1. Create Engaging and Relatable TikTok Content

Creating engaging and relatable TikTok content is crucial to grab and hold attention. Remember, TikTok is flooded with videos. What’s more, users are quickly scrolling through their feeds. If you get their attention, they’ll more likely watch the entire video and interact with it. In turn, TikTok’s algorithm promotes content that gets high engagement. The more people you reach, the higher your chances of getting sales.

When planning your video content, keep it short and sweet, fun or compelling, and authentic. One insider secret from the top-performing TikTok brands is to implement these strategies:

Flicker. This has to do with creating content around already trending hashtags, sounds, memes, dances, challenges, etc… This is what you should post regularly as it takes little to no time and effort
Flash. This is content geared towards inventing new trends or challenges. The goal here is to make it as replicable as possible. This way, the audience can easily participate in it. It’s not wise to post these types of videos often, as they won’t have much time to flourish
Flare. This is a branded campaign that includes sponsored filters, hashtags, and competitions. It should encourage people to contribute their own content. The best way to get your flare going is through influencer collaboration. This strategy is best implemented when you launch a new product

2. Utilize TikTok’s Features and Trends

Utilizing TikTok’s features and trends can help you drive sales. TikTok trends are used to increase visibility and engagement. TikTok features support small business growth by allowing streamlined purchasing processes. Here are some of the features you can try out:

TikTok Shop. This feature allows businesses to showcase and sell products directly within the app. You can even add platforms like Shopify to manage e-commerce operations
Shoppable videos. This enables viewers to click on product links directly from the video. It will encourage users to buy the product featured in the videos
Live shopping. You can host live stream events where you show and sell your products in real-time. Viewers can directly ask questions and purchase from the live stream. One study by SocialPilot found that 50% of users buy a product from a Live
Product links. You can add product links in your bio or video descriptions to direct viewers to purchase pages
TikTok Creator Marketplace. This is where brands can connect with TikTok creators or influencers. It has insights and analytics to help you find the right influencers for your campaigns
TikTok for Business. This creates a TikTok marketing strategy for you. You’ll be able to access business tools, resources, and analytics
Analytics and insights. This will show you details about video performance, audience demographics, and engagement metrics. You can use all this to refine your marketing strategies

3. Engage With Your TikTok Audience

Engaging with your TikTok audience will encourage engagement and build a following. TikTok is effective for small business customer interaction because of its interactive platform. Here are some ways to interact with your audience:

Respond to comments with video replies
Create polls, questions, and challenges
Duet with other videos
Host live sessions
Feature user-generated content so people can create videos related to your brand

Andrea O, the owner of PeachyBBies Slimes on TikTok, did this strategy. She creates video replies for comments about her slime-making process. She even makes new slime scents and textures based on people’s suggestions. This encouraged many people to comment their questions or suggestions. Now, PeachyBBies Slimes has over 6 million followers, and Andrea’s slimes frequently get sold out.

4. Post Consistently on TikTok

Posting consistently on TikTok is crucial for small business success. This is because the TikTok algorithm favors active accounts. If you post frequently, your videos are more likely to feature in people’s feeds. You can then turn those viewers into followers and, hopefully, customers. Plus, it also boosts brand recognition, relevancy, and credibility.

When it comes to how many posts you should make in a day, it really depends. The best approach is to experiment with posting once or a few times daily. Review the analytics to see if posting more increases your likes, comments, follows, shares, and sales. Many small business owners and TikTok themselves recommend 1 to 3 posts a day. Besides that, Hootsuite also gives us the best times to post on TikTok according to their studies:

What Types of Content Are Most Effective for Small Businesses on TikTok to Boost Sales?

Showing how your products work in real-life scenarios
Sharing behind-the-scenes looks at your business operations
Featuring satisfied customers and their experiences with your products or services
Educating your audience on how to use your products effectively
Participating in popular TikTok trends, challenges, or hashtags
Encouraging customers to create and share their own content featuring your products
Announcing limited-time offers, discounts, and promotions
Creating fun videos that align with TikTok’s playful nature
Partnering with TikTok influencers
Crafting compelling stories around your brand, products, or mission

5. Leverage TikTok Ads

Leveraging TikTok ads guarantees that your videos reach a wider audience. The best part is that you can choose from several types of ad formats - from basic to fun. You can even sponsor hashtag challenges. To effectively utilize TikTok ads, follow these steps:

Define your goals. Before launching any ad campaign, you must know your objectives. Do you want to increase brand awareness? Drive website traffic? Boost sales? Promote a specific product? This will help you choose the right ad format and measure the success of your campaign
Know your audience. It's a must to tailor your ads to your target audience’s preferences. For this, use TikTok’s analytic tools for insights into demographics, interests, and behaviors
Create engaging content. Remember, your ads are only as good as your content. Plus, TikTok thrives on creativity and authenticity. Your ads should reflect these qualities to capture users’ attention. So keep your content short, engaging, and visually appealing. Use catchy music, trendy challenges, and compelling narratives
Utilize TikTok’s targeting options. This is one reason why knowing your audience is important. You can target users based on location, age, gender, interests, and specific behaviors. You can even target users who have previously interacted with your content
Monitor and optimize your campaigns. Once your ads are live, continuously analyze their performance. Pay attention to metrics such as impressions, clicks, engagement, and conversion rates. Then, make data-driven adjustments to optimize your campaign
Experiment with different ad formats. Don’t be afraid to experiment with various ad formats to see which works best for your audience. A mix of in-feed ads, hashtag challenges, and branded effects can create a comprehensive marketing strategy
Collaborate with influencers. Influencer marketing is highly effective on TikTok. If you partner with popular creators, you can reach an even larger audience. And since influencers' audiences trust them, they will trust the products they promote

Is TikTok Dropshipping a Good Idea?

TikTok dropshipping is a good idea as you don’t need your own products. You simply have to:

Partner with a dropshipping supplier
Create engaging content for their products
Attract an audience
Make customers place an order in your online store or link provided in your TikTok profile
Forward the order details to the supplier. They will be the ones to handle inventory, packing, and shipping
Earn a profit from the difference between the retail price you set and the original price

TikTok actually encourages this. The app has partnered with a few dropshipping platforms, like WooCommerce and Shopify. This makes it super easy to integrate into your TikTok account. You'll be able to start a business in TikTok even without a physical store or products.

3 Major Dangers of TikTok for Small Business

1. TikTok May Face a Total Ban

Many countries, including the USA and the European Union, are considering banning TikTok. This is due to concerns over data privacy and national security. With this threat looming, it's not good to rely solely on TikTok for your business growth and success. So while you can take advantage of TikTok now, remember that it can come crashing down anytime if banned.

2. TikTok Ads Is Expensive

TikTok ads are what drive reach and brand awareness. However, the minimum amount to spend on an ad campaign is $500. If you own a small business, you might not have the funds for that. Plus, if you don't get the point across or your target audience isn't on TikTok, you'll be wasting a big investment. This is why it's super important to consider your brand, target audience, and ad campaign.

3. You May Get Overlooked in the Crowd

TikTok's reputation has expanded beyond dancing trends. According to Capital One Shopping, TikTok shoppers grew 40.5% from 2022 to 2023. With this, more and more small businesses and big companies are flocking to the platform. You’ll have a lot of competition. You may never be able to see growth or success. Although some businesses get lucky, you'll mostly have to find a unique angle to stand out among the crowd. You also need engaging video content ideas, the right target audience, and TikTok ads.

Conclusion: Why Building Digital Assets Is Better Than TikTok Business

Building digital assets is better than TikTok business as there’s less risk and more long-term value. TikTok algorithms, policies, popularity, or bans can greatly impact your business. Meanwhile, digital assets, such as websites or blogs, are owned and controlled by you. Plus, these assets can continue to generate value over time. An optimized website can attract organic traffic for years after it's created. This will bring in new potential customers and reinforce brand authority.

One of the best digital assets is a local lead generation model. Here, you create a website for a service business, rank it with SEO, and rent it to a local business. There’s less risk as the initial investment can be as low as $30 to $100. There’s also less competition as you’ll be targeting local service businesses. Finally, local business owners will be willing to pay $500+ to rent your ranked website. Over time, you’ll be able to earn a passive income of $50,000.

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