What Is a Small Business?
June 3, 2009, 10:00 am
I’m taking a break from tech talk for a day to try and handle a rather sticky problem – what, exactly, is a small business?
On its face, this seems a ridiculous question, but it seems there are multiple definitions floating around. Wikipedia defines it as “a business that is independently owned and operated, with a small number of employees and relatively low volume of sales.” All fine and well, but what happens when sales volume increases but employee numbers stay the same? The SEC widens the field financially by stating that any company with less than $50 million in annual revenue can be considered a “small entity”. And doing a “Define: small business” on Google returns all kinds of wide-ranging results.
Why does it matter? TechKnowMe targets small business owners as customers, and I know a number of you do as well. When you try to define exactly who your target customers are, however, “small business” turns out to be a rather nebulous market segment. I usually define it as a company with 1-50 employees, completely ignoring the revenue question as I’m convinced that a well-run company can just as easily make $100 million a year as a 500-person corporation.
But measuring the number of employees doesn’t seem to cut it either. The one thing small businesses all seem to have in common is mentality. When I worked for large corporations, the answer to most challenges was to throw money at them – set up a committee, get feedback, review vendors, get quotes, etc. When you have hundreds of employees, free-flowing revenue and lots of time to strategize, this process can work. Small businesses, however, tend to run pretty lean – if not financially, than at least in human power. Time spent researching vendors, requesting and reviewing proposals and gathering internal approvals is time taken from the core focus of the business, which can cripple a small team.
Successful small businesses are highly focused ventures – they concentrate on what they do best and look outside the company for the rest. Rather than create an accounting department, they turn to independent CPAs. Rather than build an in-house marketing team, they assign a point person to manage their relationship with a marketing firm. The best businesses carefully monitor the work performed by their vendors without micro-managing the relationship.
When marketing to these businesses, you need to cut to the chase – what services or products can you provide to ease their pain without creating a new management nightmare? How can you help them succeed while keeping them lean? Don’t clutter the conversation with a bunch of marketing talk – make it easy for them to research your offerings quickly and remove any barriers in converting them from a prospect to a customer. If you target small businesses as potential clients, your business model needs to provide the maximum amount of value as quickly as possible requiring only the most crucial input from your customers, leaving them with the confidence that you can get the job done and allowing them to get back to what they do best – run their company.
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