- November 2010
- Posted By Janet Muto
- 0 Comments
by Janet Muto
In an earlier blog post on the SMB market, I shared my thoughts on segmenting SMBs by employee count. While employee size is only one of many ways to segment this large, highly diverse group, it is one that is useful when thinking about how to develop and market products to SMBs.
I have spent the last few years getting to know the smaller sized business (50 and under employees). Despite their very different objectives and business types, this group does share common traits and challenges – which differentiate them from their corporate counterparts. They are all strapped for resources and dollars. This set of segments created the “time and money” mantra that separates them from larger counterparts.
Home businesses and hobbyists. As I noted in my previous blog, there are over 20 million self-employed businesses listed by the 2002 Economic Census. (Results from the 2007 survey will be available June 2011). People in this group often have home based “side” businesses, and earn additional income from their hobby or craft. These may be underemployed individuals, early and not so early retirees, at-home parents and the hobbyist wannabees (testing out the viability of their hobby before they leave their day job).
The second group within this category includes the many consultants and service providers who provide business services from a home office (often individual consultants or temporary/interim professionals). This group does invest in solutions to grow their business – but solutions must be intuitive, easy to use, and, demonstrate a clear benefit that will help them gain more business. This group tends to network heavily and can be influential with peers.
Very Small Businesses (1 – 9 employees)
There are over 4.7 million actual employer firms listed in the 2007 Economic Census. This group employs 13 million individuals, and with a range of types from “Main Street” retailers to MIT-spawned start-ups. Their needs are as equally diverse as are their structures. No matter their business type, the common element is that they don’t have the time, people, or funds to do everything they would like to do. Decisions are generally made by the business owner and while their employees have functional titles, they all tend to overlap to get things done. These owners are the prototypical “chief cook and bottle washers”. The sheer numbers of businesses offer a great opportunity for marketers– if you can get their attention! Solutions for this group must demonstrate clear and immediate benefit and require little training time.
Small Businesses (10 – 50 employees)
Depending on the business type, businesses in this group will be in different stages of growth. The key differentiator is that these businesses have started to “functionalize” roles and decision making within the business. Generally the business owner/president still calls the shots, but he or she has some bench support to implement whatever products, programs, etc., are required by the business. They are looking for solutions and trying to find effective (and affordable) ways to grow. No, you won’t close that million dollar sale with one of these businesses. But if you offer the right product, the right way and at the right price, you will make your million dollars off of these businesses.
In the next post, I’ll look at the larger SMB segments (over 50).