I myself am also involved in a startup right now, so I was intrigued by reading Andrew Gazdecki’s view and six reasons why startups need to sell to small businesses. Challenges such as transparency, globalization and the economic downturn, apply to both enterprises and small businesses. The difference however is that small businesses have less capital, human resources and what more, all the more reason to tap into this segment, of course, depending on your proposition.
The six reasons and (part of the elaborations) Gazdecki gives are the following:
1. The market is massive
In the U.S. alone, there are over 5 million businesses with fewer than 100 employees. For startups looking for a global reach, the worldwide number of small businesses is far greater than the number of big companies.
The number of big companies in the U.S. with over 1,000 employees is around 10,000, and the worldwide number is correspondingly small. Accordingly, chasing the small business market enables a startup to address an audience that is orders of magnitude larger than the enterprise audience.
2. It’s rewarding
Small businesses are generally one-person shops run by someone chasing a dream. Helping them succeed can be extremely rewarding, and along the way you can meet some very interesting people.
When serving the enterprise, it can be hard to make the connection between your work and the end product. But when you serve small businesses, you can often see a direct impact on the lives of others. Building your startup can be daunting, but this model can help motivate you in your day to day.
3. Small businesses may be “sexier” than enterprises
You may take part in your share of exciting, high profile projects when working with enterprise-level clients, but small businesses can offer the exact same thing. Indeed, the “common wisdom” says that large businesses, ee da bureaucratic slowdown, may be less likely to innovate and work on “sexy” projects. Whether this is a myth or not is up for debate. It has been suggested, however, that likelihood to innovate is controlled by culture and policies, not size.
4. The path can be easier
It doesn’t take a year to complete a sale to a small business. Many deals can be completed with a few phone calls. This means you don’t ee dan enterprise-level sales team to get a deal done. Selling to a small business also means you can keep your first products or services simple. There aren’t complex systems that you have to integrate into, there aren’t multi-layered policies to comply with, and there aren’t a bunch of departments that all need to approve the deal.
5. Product opportunities are endless
Small businesses, by definition, have a small staff and many gaps in their operation that they need help with. That is, almost every aspect of their business has room for development. There are opportunities to help small businesses with mobile strategy, social marketing, web technology, communications, transaction processing, and more. Want examples? Here’s a small sampling of successful companies that have addressed small business needs.
6. You can serve a greater purpose
What makes technology startups so special is that you have the opportunity to help people and businesses of every size at an unimaginable scale. If your product or service is useful to small businesses in your area, it may be useful to others around the world. And since the percentage of businesses that are small may be quite high in certain developing countries, your company can be a major force for the global good.
The seventh reason I will add is the following:
By providing a good technology solution you can really relieve a startup with few capital and resources if that is the type of solution you build. Relieve is key in a fast-changing environment with scarcity.
The first reason is of course huge for technology vendors. But here as well, not neccesarily. I used to be involved in a marketing technology development project as well for five years. We focussed on large organizations as our product needed customization and integration. Due to the costs, this was obvious for small businesses.
I do think the aformentioned reasons are viable for technology vendors, but not neccesarily for professional services, again, depending on what you want of course.
We for instance focus on advice and training/coaching. These are heavily depending on people which time you can sell just once. That a whole different ball-game that technology which ‘duplication’ costs are minimal or at least much less than people-intensive businesses.
Another very important reason why startups can be of much value for enterprises is for the following reason: Unique Combinations.
Innovation and creativity happen due to unique and new combinations. Schumpeter said that entrepreneurship can be defined as an art or science of innovation and risk taking for profit in the business, the quality being an entrepreneur. Entrepreneurship refers to taking out new and unique combinations. Now co-creating with large enterprises, these new and unique combinations can be:
- A highly agile versus bureaucratic culture
- Fast decision making versus slow decision making
- Experimentation and testing versus protocols
Basically, what startups can learn –and the reason why enterprises do work with startups (not being large and bureaucratic at the beginning I might hope) is because they bring something ‘freshy’ and new, reviving and opening up eyes how it can be done differently.
What is your take on the SMB sector?
Gianluigi Cuccureddu is co-founder of Damarque, helping you to improve your commercial performance through better engagement with your employees, customers and strategic business partners.
We offer high-impact training, coaching and consulting services for professionals, teams and organizations to help improve people ánd organizational performance and innovation capability in an efficient and sustainable way.