Why Selling to Small Business is profitable in economic downtimes

Guest Contributor: Albert Luk
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Happy new year! Best wishes for a healthy, prosperous and rewarding year to all the readers. 2008 obviously ended on a down note: the stock market was down, unemployment up, bankruptcies up. Is 2009 going to be another bad year?

Not necessarily. Several studies, including a recent study by the Kauffman Foundation http://www.kauffman.org/newsroom/entrepreneurs-and-recessions.aspx have shown that downturns are often great periods to start business and that theses businesses become economically important in the long haul. How important? Microsoft, Southwest Airlines and Oracle were all started during economic downtimes.

Why? As the Economist recently wrote: "one reason why downturns tend to be good times to launch new businesses is because established companies abandon promising growth opportunities too fast. Oracle and Microsoft were both born in difficult economic times."

To extend this analysis further, big businesses tend to shrink to core competencies in downtimes and shed any division or product line not immediately returning its investment to the bottom line. In some instances, the "baby may be thrown out with the bathwater" and promising projects put aside and associated staff eliminated.

This often provides opportunities or niches that smaller, more entrepreneurial, companies (often started by the same people who were eliminated from big corporations) can commercialize without the threat of a larger competitor elbowing them out during the critical start-up phase. As the saying goes, change equals opportunity.

Thus, the challenge of selling to small business in downtimes then is not, contrary to popular opinion, that there is shortage of businesses starting but finding one that will grow organically over time.

However, there are always several things to keep in mind when selling to small businesses:

1. People want relationships not an up-sell. Find ways to help these companies grow which may not necessarily lead to a direct commission and you will earn your client's loyalty.
2. Sales cycles are slow. There is no readily available pool of capital and small businesses are not flush with money at the outset. Be patient.
3. Think singles and doubles and not home runs. Many start-ups that become successful are feeling their way around at first. Develop a relationship with smaller products or services rather than over-whelm them with the large items.

Just remember all sales, especially small business sales, are based on forming a long-lasting relationship. Best of luck.