How can Small, Micro and individual businesses prepare in the US (and elsewhere) if the platform gets banned?

The potential ban of TikTok in the United States on January 19th raises significant concerns for micro-businesses and individual creators active on the platform.

These small businesses and individuals have come to rely on the platform’s unique algorithm and vast user base to achieve substantial visibility and revenue.

As TikTok has become a cornerstone of affordable digital marketing, its removal could disrupt the business ecosystem in profound ways.

TikTok’s Role in Empowering Microbusinesses

We are never too eager to talk about revolutions but TitkTok has revolutionised the marketing landscape by levelling the playing field for small enterprises with limited resources.

As of March 2024, over seven million small U.S. businesses were active on TikTok, collectively generating approximately $15 billion in revenue.

What sets TikTok apart is its algorithm, which prioritises engagement over follower count. This feature enables even small accounts to achieve viral reach without requiring significant advertising budgets.

A study found that 39% of small to mid-sized businesses in the U.S. considered TikTok vital to their survival, while 69% reported increased sales due to the platform.

Economic Contributions and the Creator Economy

TikTok has also nurtured a vibrant creator economy. In 2023, small and medium-sized businesses on the platform contributed £19 billion ($24.2 billion) to the U.S. GDP, with this figure encompassing both paid advertising and organic business growth.

Moreover, influencer marketing has thrived on TikTok. As of 2023, 61% of marketers were using the app for campaigns, making it the third most popular social media platform for this purpose.

This has allowed creators to monetise their content effectively, with many earning significant incomes to sustain their livelihoods and entrepreneurial ventures.

The Potential Impact of a TikTok Ban on SMEs in the US

It is important to remember that the court has still not ruled so things may change. The recent phenomenon of “TikTok Refugees“ may strike a chord with the final decision. Nevertheless, if the ban did go ahead, it would directly affect microbusinesses and creators, stripping them of a cost-effective platform that drives customer engagement and sales.

The platform’s unique algorithm-driven exposure is not easily replicated, which means businesses would need to invest more in marketing on alternative platforms like Instagram or YouTube to achieve similar reach.

Additionally, TikTok’s cultural significance fosters a strong sense of community that is difficult to reproduce elsewhere. A ban could thus result in reduced visibility, lower revenues, and diminished competitiveness for businesses heavily reliant on the platform.

What If TikTok Were Banned in the UK?

A TikTok ban in the UK could have a similarly disruptive effect. Certainly, many of us would lose a lot of good time because it has become the preferred platform for many in the UK too.

Nevertheless, our analysis has so far identified that small businesses and creators across Britain, particularly in sectors such as fashion, beauty, and food, have increasingly depended on TikTok to connect with younger audiences.

In fact, 75% of TikTok’s UK user base is under the age of 34, making it a vital channel for brands targeting Gen Z and millennials.

In 2023, TikTok reportedly contributed over £1 billion to the UK economy through advertising, content creation, and commerce.

A ban would certainly hurt us emotionally, but it would force many micro and small businesses to shift their focus to platforms like Instagram Reels or YouTube Shorts, which may not offer the same algorithmic advantages. Not to mention the costs of doing successful advertising on these platforms!

This transition could lead to higher marketing costs and reduced ROI for businesses.

Moreover, a ban would stifle innovation within the creator economy, as TikTok has been instrumental in enabling grassroots talent to rise. Many UK-based influencers might struggle to transition their followings to other platforms, leading to a potential loss of income and cultural impact.

What Then?

TikTok has become an essential tool for micro businesses and creators, fostering economic growth and cultural innovation.

A ban on the platform could undermine the opportunities it offers to small enterprises and creators, compelling them to adapt their strategies to survive. While diversification across multiple platforms can mitigate risks, the absence of TikTok would leave a void that may be difficult to fill.

At NorthStar, we will continue to monitor the situation. Stay tuned and follow our podcast to learn more about what to expect!