Rick Spence is the former editor of PROFIT Magazine and now consults on entrepreneurship. He writes a blog on small businesses and I enjoyed his most recent post. It discussed 5 Tips For Selling to Small Business. I particularly found 3 to be relevant tips to remember when approaching the SMB market with your products / services:
* If you're selling information products, keep in mind that entrepreneurs don't want to be educated. "They want to learn by osmosis," he says. Turn information into stories, case studies and anecdotes to make it easier to digest and remember.
* Don't try and sell features to small-business owners. "Entrepreneurs are driven by pain." Tell them now what your product or service can do, but how it can solve their most pressing problem now.
* Get in the ground floor with a small-business prospect. Sell a low-cost product or service that will get you in the door. Once an entrepreneur trusts you and your ability to create value, you will find that many of their budget restrictions disappear like magic.
Microsoft is building a presence in the small business market. Windows and Office are, of course, standard tools for most entrepreneurs but with offerings like Office Small Business Accounting, Microsoft is targeted SME's and going after entrenched players like Quicken. Microsoft's new Office Live also helps small business owners establish free company websites and email accounts to help them build an online presence. They have also created a Small Business Specialist partnership program to connect with organizations that fill the needs of small businesses.
Microsoft defines small business as being under 50 employees and up to 25 personal computers and their upcoming release of Vista and Office 2007 will be an interesting one to watch. The consumer market is an obvious market for the products but small businesses could drive the growth of both products and Microsoft's future.
I'll be keeping my eyes on Microsoft to see how they target small business owners and penetrate the market. Vista and Office 2007 are scheduled for release next week.
Intuit just released a report on where they see small businesses going and what they will look like in 2017. Studying small business trends and staying on top of where entrepreneurs are going are important keys to successfully selling into the entrepreneurial market.
The top 5 findings from the report are:
Entrepreneurs will no longer come predominantly from the middle of the age spectrum, but instead from the edges. People nearing retirement and their children just entering the job market will set the bar as the most entrepreneurial generation ever.
American entrepreneurship will reflect a huge upswing in the number of women. The glass ceiling that has limited women's growth in traditional corporate career paths will send a rich talent pool to the small business sector.
Immigrant entrepreneurs will drive a new wave of globalization. U.S. immigration policy and the outcome of the current immigration debates will affect how this segment performs over the next decade.
Contract workers, accidental and social entrepreneurs will fuel a proliferation of personal businesses. Economic, social and technological change - and an increased interest in flexible work schedules - will produce a more independent workforce seeking a better work-life balance.
Entrepreneurship will be a widely adopted curriculum at educational, trade and vocational institutions. As a result, artists, musicians and others not traditionally exposed to business education will learn not just their trade but small-business management skills as well
SAP is the 3rd largest software vendor in the world after Microsoft and IBM. With 38,000 large global companies as clients, they are quickly becoming a victim of their own success and are now targeting small businesses to continue their growth.
Yesterday SAP announced that it's going to spend as much as 400 million euros, roughly $520 million, over 2 years to create an organization that can sell to small business clients. With this new move, SAP is expecting their profit margin to drop by 3-4% this year and they will come up against a number of obstacles selling to small businesses including:
There are more SMB's to target and their needs tend to be more varied
SMB's require bigger sales and support teams
SMB's typically also take longer to make buying decisions
SMB's require more intensive sales advice than larger enterprises
It will be interesting to see what strategies SAP uses to tap the small business market and how successful they are after spending half of a billion dollars.
Work.com is a directory of small business guides. Here, entrepreneurs can look up how to guides for their businesses on everything from hiring and managing employees to sales and marketing to starting up.
They recently put out a list of their top 20 guides. These are the most popular guides that have been downloaded by their visitors and it gives some insights into what small businesses are looking for and where they perceive the problems to be in their operations. The top 20 list includes popular topics such as starting a business, doing business on the Internet, and hiring and managing employees. Here is the full list:
The Small Business Trends Index looks at the most popular articles that entrepreneurs are talking about. These are the most discussed stories by small business owners over the past month. The higher the score, the more the topic is being discussed. The total scores add to 100.
#1: Index Score: 26.1 Get an extra $30-$60 back on your tax return by filling in one line. Just like the title says, an easy way to get some free cash this tax season. http://www.snopes.com/business/taxes/excise.asp?1
#4: Index Score: 16.2 What are the jobs Americans won't do? Americans work longer hours than Europeans -1,804 hours per worker for the United States in 2005, compared to 1,434 in Germany and 1,535 in France. http://www.slate.com/id/2157483/
#5: Index Score: 14.2 New Virgin America airline goes viral video to make its case Virgin makes their case in the video seen in this story and asks for the publics help in lobbying support. http://www.slate.com/id/2157483/
I just issued a press release that discussed the top 3 small business trends for 2007. I've included it below:
What's Hot, What's Not Top Three Trends for Small Business in 2007
A new year is upon us and with that comes new opportunities for small business owners everywhere. What new technologies will your business embrace this year? What new partnerships will you form? How will you take advantage of the changing marketplace?
In answering these questions, entrepreneurship expert Evan Carmichael suggests the importance of examining the rising trends that are promising to impact small business in the coming year. "The beginning of a new year is a good opportunity for entrepreneurs to revive their drive for success and give their business a fresh start," says Carmichael, "but in order to move forward, they need to look ahead at what is to come."
Top on Carmichael's list of small business trends for 2007 is the continued rise in importance of being able to do anything and everything online. "Small businesses today can't just have a one-page website," he says. "The division between IT and business is shrinking. From e-marketing to selling products online to offering podcasts, small business owners need to embrace everything the Internet has to offer."
A glimpse at the number of users on FeedBurner's website - an online news feed management provider - is evidence of Carmichael's point. Today, FeedBurner tracks over 1.6 million podcast subscribers, a figure that has doubled in the past six months alone. Similarly, a 2006 PEW Internet Project report states that 12 percent of Internet users have downloaded a podcast. "This year," says Carmichael, "small business owners need to seriously explore these various types of online tools as means of better reaching their customers."
A second trend that will affect small business this year, says Carmichael, is the focus on everything ‘green'. "Consumers are starting to demand more from those they do business with," he says. "Whether it's behaving in a more sustainable way, supporting environmental causes, or offering green products, small business owners can take advantage of this growing concern."
Venture capitalists are beginning to pick up on this trend, where in the U.S. they invested over $150 million in green-focused startups in 2005, double the amount of the previous year. A study by the Organic Trade Association shows similar growth: in 2005, consumer sales of nonfood organic products in the U.S. totaled $744 million. "Instead of being encouraged by their customers to become more environmentally-friendly," says Carmichael, "small business owners can take the lead and inspire their consumers."
Finally, Carmichael points to the rising trend of entrepreneurs that come from all walks of life to try their hand in business. "Whether they're students trying to pay their way through college, or seniors who are bored with retirement, more and more people are realizing that it's never too early or too late to start a business," says Carmichael. "A single mother who has her own company, for example, is no longer the anomaly it once was."
A recent study by the U.S. Center for Women's Business confirms Carmichael's point. The research found that one in eleven adult women is an entrepreneur, the majority of who are mothers. Similarly, 30 percent of the entrepreneurs who use the services of the Center for Women & Enterprise are single mothers.
"The new year has just begun," says Carmichael. "Now is the time to plan for the next big thing. Pay attention to the trends and ensure your small business doesn't get left behind."
I just came across a press release that Dell is holding a competition to find the best small business that "has used technology to drive a significant change or develop a competitive advantage in delivering superior customer value and experience."
While the message could be simpler, Dell is doing a lot of things right here:
Don't go it alone - Dell has partnered with the National Federation of Independent Business (NFIB) to put on the competition and help promote it
Give prizes - Aside from the recognition, the winner receives $30,000 in free Dell products and a lifetime membership to the NFIB. There are also prizes for the top 9 finalists
Offer something unique - While the products and NFIB membership are good starters, the winner also gets to spend a day with Dell founder Michael Dell at the company's headquarters. What better experience could a small business owner ask for than to learn from one of the true entrepreneurial success stories of our time (see yesterday's post Teach Entrepreneurs What You Know).
Running contests and getting involved in the small business community is a great way to stand out, attract attention, and build a brand as a company that cares about entrepreneurs.
Small business owners are always on the hunt for information to help them grow their companies. They frequently turn to their contacts, books, websites, magazines, seminars, and anything else they can get their hands on to give them insights on how to get better.
This provides a great opportunity for anyone selling into the small business community: What expertise can you offer entrepreneurs to help them with their businesses? Small companies typically don't have the same infrastructure, policies, and procedures that most big companies take for granted. What is your hiring procedure? How do you recruit top talent? How do you set your compensation packages? How do you motivate your salespeople? How do you generate new leads? What kind of relationship do you create with your suppliers and channel partners? These are all questions (and there are many many more...) that may be easy for you to answer but provide invaluable insight to small business owners who do not have the same access to resources as you do.
Entrepreneurs like to deal with people they trust and have a relationship with. A great first step is to establish yourself as someone who has valuable information to provide them with. Become more than a supplier to them. If you can become a valuable business advisor you can build a lifetime relationship with the entrepreneur.
Think about what you have to offer and what would be valuable to your clients. A great example is Microsoft Canada's Small Business + program. They give small business free access to Microsoft product training (Outlook, Excel, etc) but they've also partnered with industry experts to provide comprehensive business training. If an entrepreneur wants to improve their sales or marketing skills, for example, they can turn to the Small Business + training program to do so. It's a great way for Microsoft Canada to stand out, provide more value to their clients, and build a trusted business advisor relationship.
Whether it's online training, seminars, or just a simple phone call with a new prospect, add value to the relationship by teaching them something you know that can help them. Build the relationship and credibility before asking for the sale.
Managing cash flow and securing startup and growth funds are among the biggest challenges a small business owner faces in building a successful company. To help finance their development, entrepreneurs are increasingly turning to their last resort: credit cards.
According to the Small Business Association, the number of small businesses carrying debt increased by 25% from June 2004 to June 2005. Over that period the number of businesses carrying under $100,000 in debt increased from 15.2 million to 19 million. A full 70% of that increase can be attributed to credit cards.
The study also found that the total dollar amount increase was only 1.9% suggesting that the developing trend is a larger number of small businesses spending on small dollar amounts as supposed to existing small businesses increasing their spending amounts.
Even though the small business lending as a whole has been slowing down, Chad Moutray, chief economist for the SBA's Office of Advocacy feels that the "small business credit card market continues to be quite dynamic."
Does your company offer small businesses the option to finance their purchases by credit card and over a period of time? If not, you could be missing out on a rapidly growing trend that can help drive significant sales.
The Word of Mouth Marketing Association recently put out a report stating that 76% of consumers think that businesses do not tell the truth in their advertising.
They went on to discover that the number one way consumers learn about new product ideas is through word of mouth. It helps cut through the advertising clutter and the increasingly busy lives of consumers.
92% of consumers cited word of mouth as the most common way they discover new products, up from 67% in 1977.
I see it happening all the time in my Mastermind Groups. Small business owners are facing challenges with their companies from sales to financing to product sourcing. A recommendation from a fellow entrepreneur who had a good experience with a supplier almost always closes the deal.
Is your company doing enough to encourage positive word of mouth?
Check out these resources for more information on how to build your word of mouth effect.
A new poll conducted by Staples of 300 small business owners in America with less than 20 employees found that they are working long hours, take little vacation time, and cannot distinguish between working hours and time off.
Some of the survey results are:
Always On Email
18% read work-related emails in the bathroom and 49% read them while driving
What 40 Hour Work Week?
62% work well beyond a 40 hour work week
21% work over 80 hours peer week
Top 3 Reasons Why Entrepreneurs Work So Hard
Business growth
Added responsibility
Trying to keep up
What Personal Time?
21% work while eating dinner at least 4-5 times per week
37% could not readily remember their last vacation
Of those who did vacation, nearly half admitted to working during some portion of it
68% work on days off, checking e-mail, voicemail or making work-related calls
66% work after hours and at night
51% work on holidays
47% work during what is supposed to be family time
Remember when selling to small business owners that they are stressed out, overworked, and wearing many hats within the company. Understanding their circumstances will go a long way to helping you close the deal.
The fastest growing segment of the small business market are entrepreneurs over 50 years of age. In Canada, one in four small business owners is over the age of 50 and 30% of people over 50 are entrepreneurs according to the CIBC.
These small business owners, often dubbed as 'seniorpreneurs', do not have the same needs or wants as their younger counterparts. They typically set up businesses as a lifestyle decision rather than out of necessity or to grow a large company. Most seniorpreneurs do not want rapid growth because they've recently retired and want to avoid putting in long hours.
Seniorpreneurs see starting a business as the chance to do what they've always wanted to do. They want to break free from their employee status, typically have the financial resources to do so, and want to enjoy their lives while running a small company.
While most seniorpreneurs do not run the high flying growth companies that most want to be selling to, they do represent a large and often overlooked segment of the market that could be profitable for you if you're selling to small business.
What are small business owners looking at for technology in 2007? Anita Campbell, writer of a small business trends blog, recently compiled a list of the top tech tools small business owners can't live without in 2007.
They include:
iPod Shuffle - The newest iPod on the market is a tiny inch-and-a-half long gadget that clips on your clothes for convenience.
Laptop wheelie bag - If you do much traveling with your laptop, a wheelie bag means you arrive at your destination without feeling like you need a chiropractor.
Bluetooth headset- I can clip the headset on, walk into another room away from the phone and still continue my conversation. Ah, liberation.
Free Google account - You can get everything from email (over 2.5 GB of storage) to spreadsheet software, to image editing software and much more.
Kate Spade notecards- To stand out in an electronic world, go counter-culture and send handwritten paper thank-you notes.
U.S.Postal Service website - You can calculate and purchase postage online; print mailing labels with postage; schedule a pickup of a package, and track delivery.
Accounting software - Accounting software tracks and organizes your finances; makes it much easier to get prepared for tax time, and lets you run sophisticated reports that help you stay on top of your business.
Virtual Switchboard - With an inexpensive, software-based virtual switchboard, we are able to have one business phone number for all of us, even though we are spread out over the country.
PayPal- PayPal is the shopping cart that I use on my websites. It is now an essential part of my business processes.
Smartphone- Smartphones and similar devices are the best choice today if you want to send and receive email regularly from your phone.
Steve Strauss writes a small business column for USA Today. His most recent contribution highlighted the top 10 small business trends for 2007. They include:
No. 10: Web 2.0:
We are now seeing the emergence of what has been called Web 2.0, and it is great news for the small business person. The novelty and nervousness of buying online is now gone and e-commerce has exploded. One example: According to the Internet retailers' industry group IMRG, Christmas sales this year were up 50% over last year.
No. 9: E-marketing Trumps Traditional Marketing:
Online marketing is booming. Small business advertising is the backbone of the Google empire, and a main reason small business people like it is that they pay only for qualified leads (or clicks as the case may be.) Google didn't become Google by accident. Savvy entrepreneurs are moving a significant portion of their marketing online.
No. 8: Little is the New Big:
The latest statistics show that there are now at least 20 million microbusinesses in this country, and by some estimates, the number is much higher. These businesses are fed by the ever-increasing, powerful, technological tools being made available to small business, as well as the growth of microbusinesses worldwide.
No. 7: Say Hello to the New Consumer:
The Boomers are starting to enter, if not old age, then late-middle age, as the first wave begins to turn 60. That's a market. Gen Y, comprised of the Boomers' children, is a sophisticated, computer-savvy, independent-minded bunch. Another potentially lucrative market. The final piece of this new market puzzle is the growth of the Hispanic market.
No. 6: Fragmentation is Changing Everything:
There are hundreds of television stations available to you right this very minute, hundreds of regular and satellite radio stations, as well as a multitude of Podcasts, downloads, uplinks, and billions of websites. The television networks are losing power and market share because information is now readily available 24/7 in a variety of formats. Information is fragmenting, as is business: Millions of small businesses around the globe have become international business thanks to the Internet.
The Brooks Group is a sales and sales management training and consulting firm that has helped more than 2,000 organizations improve their businesses through unparalleled training, follow-up, reinforcement and ROI-tracking programs.
They write a monthly Sales newsletter offering advice to businesses trying to improve their sales results. A recent issue discussed posionint your product or service for entrepreneurs:
Entrepreneurs often respond to salespeople by saying, "That doesn't apply to me." Or "my business is different, it's unique." It's important to realize that in the case of entrepreneurs, the owner and the business are practically one and the same. And what they're really saying is "I'm unique, but you don't make me feel that way."
Entrepreneurs are also strongly attracted to products and services that have been designed specifically for their unique situations. If it were up to them, entrepreneurs wouldn't buy a single product or service that wasn't designed and developed precisely - 100% - for their specific business, industry, application, or competitive environment.
Entrepreneurial buyers want to buy products or services that are practical, street-smart, and not theoretical because they want solutions that:
Will eliminate complexity from their lives
Won't strain the company's resources
Won't put additional demands on their own personal time
Entrepreneurs often have little patience for complexity because it interferes with the hands-on, quick-action performance. They consider so vital to their personal independence.
An entrepreneurial buyer might be more receptive to your product or service if you alleviate some of their anxiety by saying something like: "Before we discuss our product let me stress that it is practical and street-smart. It's also been carefully designed for your unique business situation."
The insurance company Zurich recently polled 1,028 small business owners to examine their working habits. The results were that the entrepreneurs are overworked and underpaid compared to their employee counterparts. Many of the small business owners were working up to 72 hours per week, taking no vacations and taking home less than 20,000 pounds per year (equivalent to minimum wage for the number of hours worked).
Overworked Entrepreneurs Takes Its Toll
50% are too busy to take lunch breaks
48% work 6 or 7 days per week
18% work over 12 hour days
40% say the long hours are contributing to their stress levels
82% have not taken a vacation in the past year
42% are concerned with the impact their business is having on their family
Doing Everyone's Job
70% do the customer services, sales, operations, supply chain management, HR, risk management, premises and marketing for their businesses
60% do their own bookkeeping and accounting
50% manage their distribution and IT
Not Taking Home The Big Bucks
Only 51% pay themselves a regular salary
42% draw pay depending on the success of the business
Of those that take a salary, 39% take less than 20,000 pounds
It's important to remember when creating your message for small business owners that their business is one of the most important aspects of their lives. They spend the majority of their waking hours working on the business, do everything from production creating to sales to human resources and don't pay themselves very well for the privilege.
Greg Sommerville, a computer consultant who advises software companies on selling tactics wrote in a recent article a few tips on the differences between selling to small and large companies.
If you are selling software to businesses, the first question to answer is, how big are the businesses? Selling to small business owners is a completely different thing than selling to Fortune 500 companies. Here are a few differences and things to think about:
Big and small businesses have different tolerance levels for high prices.
Big businesses in some cases consider a higher price to be a sign of quality. Small businesses may also believe this, but may go elsewhere if the price is too high.
Big and small businesses have different expectations of follow-up service and support.
There are a lot more small businesses in the world than large corporations, but large companies are well known and easier to directly target.
Often, large corporations have formalized rules for purchasing software that must be followed, or they require legal contracts to be signed. Small businesses are usually much more casual about these things.
Finally, selling business to business (B2B) is often easier than selling to consumers because there is less competition.
Think about the ramifications to selling to another business. Prepare before you promote. Keep your target in mind when creating promotional materials.
As small business owners are increasingly becoming more influential, it's not only big business and other entrepreneurs who are trying to tap into the lucrative market. Politicians also see the opportunities and are trying to get their message out to the small business community.
How are they selling themselves?
A post in MyDD, a blog for Democrats, outlines some strategies for politicians to use to reach small business owners. Among the suggestions observations are:
What type of people are small business owners?
They have a very strong sense of self reliance and personal accountability. Community is highly valued by Small Business People. The operate their businesses and employ people in our communities. They raise their families and worship together with us in our communities. They give back to their communities by serving in Kiwanis, Optimists, and all other manner of civic organizations, both international and local in scope. Small Business People also vote overwhelmingly Republican.
What strategy should you use to talk with small business owners?
The first thing to do is to identify which among your values is most applicable to this subject. Small Business People value personal accountability. They know full well that given an even chance, they and they alone, are responsible for their own success or failure. Small business people value community. They raise their families, worship and run their businesses in their communities. They are the backbone of the Kiwanis, the Optimists and other civic organizations. They run for City Council, belong to the Chamber of Commerce and support their churches and local charities.Small Business People value independence and freedom from over burdensome governmental regulations. Their trade group is the National Federation of Independent Businesses. The issues that are important to them include competition, government and regulatory reform and tax relief.
The post goes on to give Democrats ammunition to use against the Republicans when talking with small business owners. You can read the full post on MyDD here.
A Broadwick Corporation survey of 314 small business owners measuring their work habits was recently released. The results show a number of important differences between male and female entrepreneurs which should impact how you tailor your message to effectively target them. Among the findings are:
How do you measure success?
Women's top response: Being in Charge of My Own Time
Men's top response: Financial Security
How do you handle email?
Women's top response: Scan it and read the entire email later
Men's top response: Read emails as soon as they are received
When do you check email?
Both men and women had the top response of checking email as soon as it arrives
EvanCarmichael.com is the world's #1 website for small business motivation and strategies. Evan also runs a series of successful Mastermind Groups in Toronto for entrepreneurs.
