Small businesses are typically type casted as a fickle bunch. They have no loyalty and will jump from provider to provider if they can save a nickel. This, however, is not usually the case. Just like any other business, entrepreneurs rely on their suppliers to be there for them and support their operations. It takes a lot of effort and resources to change suppliers. The main reason for why big businesses churn through their small business clients so frequently is due to a lack of understanding and miscommunication. You cannot treat a small business client the same way you treat your corporate clients.
Mind The Details One main difference is that in big companies there are many departments and a number of people responsible for running different sections of the business. In smaller businesses, however, you are usually never further than one or two people away from the owner which means that it is a lot easier for the entrepreneur to stay on top every detail that goes on in the company. Be prepared to be scrutinized on an ongoing basis by your small business clients. Pay attention to the details of their accounts and make sure you do not slip up. The owner will usually always demand higher quality than the employees so you will need to meet that standard.
Be Open And Honest Whether it is missing a deadline, forgetting to make a shipment, or not accomplishing on a key goal, there will always be mistakes made in any business relationship. More than anybody, small business owners understand this. Every small business owner has gone through the growing pains of getting their companies off the ground and has made a host of mistakes themselves.
What entrepreneurs respect is accountability and solutions. What drives entrepreneurs crazy with big companies is getting the run-around. Nobody in a big corporation wants to take accountability, the entrepreneur gets bounced from department to department, and it takes 10 times as long as it should to resolve the problem.
Small business owners want you to handle the problem like they handled theirs - admit that you made a mistake, apologize for it, and do everything in your power to resolve it as soon as possible.
If you mind the details and are open and honest with entrepreneurs in this fashion you will win their respect and earn their loyalty.
Best Buy is most well known for being a retailer that services the consumer electronics market but with two of its closest competitors, CompUSA and Circuit City, closing down stores, Best Buy is looking to expand into a more profitable sector: Small Business.
If you have not already heard of Best Buy For Business, you soon will as they have just acquired broadband service provider Speakeasy for $97 million. Last year Speakeasy employed 300 people, had over 40,000, and generate revenue of $80 million. It will now become a wholly owned subsidiary of Best Buy.
"Best Buy For Business is all about helping small businesses grow or operate more efficiently through technology. By joining forces with Speakeasy, a company with a true passion for helping entrepreneurs run their businesses, we are making technology more accessible to small businesses by creating a single source for their IT needs," said Darren Jackson, Best Buy executive vice president and CFO, in a statement. "With Speakeasy in our portfolio, we are better equipped to provide our small business customers with one-stop shopping for all of their technology needs."
The point of the acquisition? Position Best Buy as a champion of small business IT and communications solutions, simplify technology for entrepreneurs, make it accessible, and improve business performance.
Today I wanted to tag onto Albert's post from yesterday about the importance of hiring people who have small business experience if you want them to understand and sell to small business owners.
Small business owners know and appreciate it when you speak the same language as them - you need to make your business small business.
This was recently highlighted in an Indystar.com article about National Federation of Independent Business (NFIB) lobbyist Kevin Hughes. Kevin did not run a business but learned the ropes by working for 4 years for a senator who owned a series of gas stations in Cleveland. Small business issues quickly rose to the top of the agenda which forced Kevin to better understand the industry.
"I gained a pretty good understanding and appreciation for what small-business owners go through . . . and was able to see how that very closely interacted and intertwined with politics," he said.
With small business education being at a premium, Kevin was able to take his knowledge and went to work for the NFIB to continue supporting entrepreneurs.
When you hire people who can speak the same language as your customers everybody wins. You get more clients and your clients finally can buy from a company that understands their needs and wants.
I primarily read two blogs on selling to small business: Rick Spence's blog and this one.In the last month, both Rick and Evan have posted articles on building trust before successfully selling to an entrepreneur.I agree whole-heartedly. A good first step in building trust is finding some type of affinity with small business owner before you can sell anything.
Affinity is typically built through common experiences. Those with common experiences tend to relate better than those with divergent life experiences. For simplicity's sake, I am going to describe account managers I have met who have a lot of success selling to small business and those that do not based on the life experiences of each.
Let's call the successful account manager Mary (Mary is not a real person but rather an amalgamation of many different successful SME account managers I have met).Mary is typically on her 2nd or 3rd career, worked in some type of entrepreneurial setting (or, to put it another way, has not worked in a big corporation all of her life), understands from practical experience the industry she is selling to (or perhaps has worked in it herself) and understands how to create solutions for clients.
Without ever selling a good or service, Mary already has the following unique value propositions:
Entrepreneurs tend to experiment so they appreciate Mary's many life experiences;
Mary can speak from experience and not the text book; and
Having worked in an entrepreneurial environment, she understands the daily life of her clients.
Bob- an amalgamation of many unsuccessful SME account managers I have met- is typically on their first career, spent his entire professional life in an institutional setting, is well educated but never ventured much outside that world.
Bob tends to be a turn-off for many entrepreneurs for some of the following reasons:
Bob is perceived to be too institutional; Bob is a "suit" and "not one of us."
Bob is perceived to be bureaucratic; he understands corporate policy well but does not tend to know how to make that work for his clients; and
Bob speaks "MBA"- big words that do not matter much in the entrepreneurial world.
Mary and Bob are generalizations. Nonetheless, having met both Mary's and Bob's in the course of my practice, my preference is to buy from Mary.
For anyone wanting to selling to the small business market, a good starting point would be to analyze hiring practices and determining whether you have a lot of Mary's or Bob's in your sales staff. After all, sophisticated marketing campaigns only go so far- it's the people selling your good or service that will be the real difference-makers.
Word of mouth marketing is one of the best ways to target small business owners. Many B2B decisions are made through referrals as SMBs heavily weigh the opinions of their peers when purchasing a new product or service.
So how do you get your customers talking about you?
Here's another great idea from the BIG marketing for small business blog: Profile Your Customers. The idea is simple - every business wants to get noticed so why not create a profile page where you highlight some of your new or best clients? Your clients will appreciate the exposure, stay loyal to you, and tell their friends about how they got linked from your webpage. As an added bonus, testimonials and case studies are great selling tools and build a greater sense of trust than marketing material direct from your company.
Here is how the BIG marketing for small business blog describes the opportunity:
Many are craving added attention and profile, but simply can't afford it - their is value and opportunity in that - so get moving and make it happen. New prospects will take notice when shopping around. You'll be seen as more customer-centric and focused on their success as oppose to just your own. They will also see the greater value of dealing with you, knowing that you'll provide them with greater profile through your customer-focused marketing endeavors. You can start by doing one simple addition to your website. Create a landing page dedicated only to profiling your customers with a link to the page appearing on your home page. Include their picture, business name and logo, product/service description, and links back to their web site. What do you think the first thing your customer will do when they see their profile on this page? They'll send it to their peers, friends, staff, mom and dad. They'll likely add a link back to this page from their site (an added bonus which increases your search engine optimization efforts). All of a sudden, this simple addition has brought you added traffic, exposure and a happy customerfor all of $0.
Have you empowered your customers and given them opportunities to talk about your company by profiling them off of your website and in your marketing materials?
Entrepreneurs are notoriously cheap. They cut corners, delay payments, and have many holes in their operations all in an effort to save money. Business owners will often also tend to try to take on more than they should within their companies when they are not the right person for the job.
A good example is a recent survey put out by 1&1 Internet. 1&1, one of the most popular web hosting companies in the US with over 6.5 million customers, found that over 30% of small business owners use do-it-yourself packages to create their own company's website.
The survey found that business owners agreed that if they did not have a website, they would lose business to their competitors and that a poorly designed website would also lead to lost sales opportunities.
This is the typical situation many SMBs face when making a purchasing decision: They do not act until there is so much pain that they are forced to do something. Entrepreneurs now realize that if they do not have a website they can no longer keep up with the competition - so they are forced to get a website created. Even though they acknowledge that a poorly designed website can lead to lost opportunities, 30% still opt for do-it-yourself packages because it is cheaper and a poor website is better than no website and it is not painful enough yet for them to make the leap to a better looking website.
The challenge for professional website designers and for any company trying to sell to the SMB market is to show that the entrepreneur needs to act today - or else they will lose out. You need to demonstrate the clear pain points to the small business owner if you hope to get her attention and her money.
Is your company creating a clear value proposition that shows the pain the business owner will experience if they do not buy your product or service immediately?
I came back from a week in New York City and began plowing through all the email in my system and found that everyone is talking about Microsoft's upcoming Small Business Summit.
Microsoft is standing out because they are creating the largest virtual conference ever for small business owners, they have almost 60 presentations people can listen to, and they've attracted big speakers like Guy Kawasaki.
It's also free to register - a price tag that will attract any small business owner.
Microsoft sure is generating the buzz for this event - I'm looking forward to seeing how well it goes! To learn more about the event and register for free, visit the Small Business Summit website.
Over the next week I will be in New York on a mini vacation. Thank you for your continued support and readership! I'll be back on the 19th and will return to my regular posting in the blog!
The nightmare of every company selling into small business is what happens when your customer goes out of business and still owes you money? With a new Bureau of Labor Statistics poll showing that only 44% of new companies make it to their 4th anniversary, it's a more common challenge than you might think.
According to Forbes, the 10 Riskiest Business to Start (and therefore to sell to as well) are:
Trucking
Slave to oil prices
Large competitors only earning single digit profits
Facing increased government regulations
Finding trustworthy drives a problem
Money Services Businesses
Many cheques from customers bounce
Finding a bank to supply the cash is difficult
Facing increased government regulation
Large banks like Citigroup and Bank of America are avoiding the industry
Auto Repair
Razor-thin margins
Insurance companies pay the bills and don't like paying much
National competitors spread costs through high volume
Shortage of skilled mechanics
Personal Services
Commodity businesses who compete on price
Low margins and often high startup costs
Measurable growth hard to achieve
Food Stores
Very competitive industry
Margins between 1 and 4%
Dominated by very large players
I will continue with the other 5 riskiest businesses to start (and Sell to) tomorrow.
Ron McDaniel is one of my newest expert authors for EvanCarmichael.com and is an expert on how to generate buzz.
In his blog, Buzzoodle Buzz Marketing, Ron laid out strategies that bigger businesses can use to generate buzz and attract attention for their companies. I thought it would be worth sharing with you:
Here is what you do if you have more than a 100 employees but want to create organic, powerful buzz that spreads.
Think like a small business. Create a small team of people that want to participate and give them the tools, guidelines and stories to succeed.
Loosen up the big business culture for these people. Let them take some chances and have fun. You may not love some of the things that are said, but it is more likely to go viral and take off it is authentic and fun.
Stop worrying about control of the message. Set guidelines, but let go of the fear. You lost control of your message years ago anyway.
Monitor the web. Make sure you know what is being said about you and respond quickly to issues. Nothing creates good buzz better than taking care of bad buzz quickly and with an eye on converting the unhappy person to being a fan of yours.
Encourage more people to put up online profiles and connect in online groups.
A new survey by AMI-Partners reveals an interesting trend in the CRM / ERP market. Medium sized business are adopting the new technology to help them grow their businesses but small businesses are not.
According to the study, over 33% of medium businesses are currently using CRM and ERP system while over 25% of them are planning on making a purchase within the next 12 months. This represents a significant opportunity for CRM and ERP players looking to move downstream from their large corporate clients.
Sau Lam, a research analyst for AMI-Partners had this to say:
This data indicates that U.S. MBs have made the connection between streamlining and automating business processes, and maximizing productivity and value in the market. MBs also recognize the value of integrated suites: 75 per cent of those surveyed use an accounting/financials module that is part of a larger solution suite.
What are the top drivers of the growth in the medium business market?
Compete more effectively with larger companies
Improve operations
Better serve customers
Meet evolving business needs and regulatory requirements
The industries leading the ERP boom are wholesale and professional services while professional services are the innovators on the CRM side.
Small businesses, however, were a different story altogether. While almost 75% of small businesses use accounting software, only 12% use ERP / CRM systems and although 11% of small businesses plan to make purchases in the next year, it is far short of their medium business counterparts.
What's holding small business back?
High price tag of applications
Lack of IT staff to support implementation and support
Small businesses are always looking up to big businesses to get ideas for how to structure their growing company and implement policies and procedures.
Well now there is a book. I came across a PR for a new book called: Marketing Works: Unlocking Big Company Strategies for Small Business. It professes to employ a "step-by-step process of how a small business owner can effectively leverage marketing techniques to maximize the potential of their own business, regardless of the market they operate in."
I have not read the book and cannot endorse it but it reflects a growing trend of providing big company best practices to small businesses.
Fortune 500 companies have thousands of best practices that they take for granted but entrepreneurs are yearning for. The first company to share these ideas in an easy to understand format for small business owners will generate a lot of buzz in the SMB community and build trusted relationships with their prospective clients.
SurePayroll put out it's newest list of the Top Ten States for Small Businesses in 2007. The SurePayroll Top Ten is based on employee growth. The underlying presumption is that growth in size suggests that a small business is doing well. The list for 2007 is:
Utah
Maryland
Nevada
Colorado
Arizona
New Jersey
Indiana
California
Texas
North Carolina
The ability to grow employee headcount in an environment where labor costs are rising also shows strength in these Top Ten states' small business economies.
At the same time, small business employees in these growth states can also view these economic results positively - jobs are available to them and salaries are rising. While employees in other states did experience salary growth in 2006, the job growth in most states was flat or declining in 2006.
According to Intuit Inc.'s Future of Small Business Report, Immigrant women are one of the fastest-growing segments of small business owners in the United States and can expect to be a sizable portion of small business owners by 2017.
Immigrant women are starting businesses at a rate 41 percent higher than native-born women.
Why are they starting businesses:
For flexibility to raise children
To avoid barriers that come with traditional jobs
Because their skills do not translate well into corporate America
Immigrant women are "prone to taking risks," said FarhanaHuq, of CEO Women, a San Francisco nonprofit that helps low-income immigrant women start businesses. "They really just put themselves on the line."
Language skills and relationships from home countries also give immigrant women advantages that help them find suppliers and customers.
Does your company have a strategy to sell to the increasing number of immigrant women owned businesses?
It looks like the banks in Australia are becoming more small business friendly, according to The Australian.
Ralph Norris came on as head of the Commonwealth Bank, admitted that the bank's relationship with small business could be better and he promised to lift the bank's game with the sector.
Historically, micro or very small businesses were not on the radar screen to banks unless the business was flying high and/or the business owners were prepared to hand over the deeds to their house. The banks have learned that SMEs can be very profitable. According to the Australian:
One of the greatest ironies over the past two years is that big business has discovered that small businesses are potentially great customers. They spend more on things such as banking services, IT services and telecommunications. And on top of that, they are big buyers of small-business equipment.
The article goes on to discuss a new trend in Australian small business banking: partnering with mortgage brokers:
An interesting development for small business and gaining access to loans is the arrival of mortgage brokers now chasing small-business customers. Pam Sullivan, director of All Finance Services in Joondalup, Western Australia, and a director of the Mortgage Finance Association of Australia, says residential property mortgage brokers are looking to diversify into commercial lending because in some states in Australia the housing market has slowed considerably.
"Brokers wanting to enter the commercial arena either need to undertake a commercial course to obtain the extra knowledge or work on a buddy system with another broker who can assist them," she said. "Several lenders are now paying referral fees to brokers for commercial business which could also be attractive to a broker who is not experienced in this area."
Sullivan expects small business will have access to a greater range of lenders and products to suit their individual needs.
"If they go to their bank they only have access to what that lender can offer which is not always the best one out there," she said.
This will include helping small businesses into cash flow lending opportunities, which if we take a line on the success of mortgage brokers in helping to provide better loans at better rates of interest, has to be a good thing, in general.
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.
