Agencies Only Reach the Most Affluent Small Businesses
The B2B services that all small businesses need are managed by affluent founders who do not always see themselves as affluent. Because they are not aware that their lives are so different than the majority of people who own small businesses, they are not adequately reaching 80% of small business owners who need their services.
Some of this is by design because it is much easier to maximize income when you market only to those with deep pockets, but much of it is because they are failing to recognize that small business owners are NOT like them and do not see any of their promotions.
SBA Ignores Most Small Businesses
SBA does not serve most small businesses because their owners can never qualify for SBA loans or services. SBA primarily serves the largest small businesses – not the smallest – and they are not the kind of “small” that would come to mind for most Americans:
“To identify small firms eligible for its programs, the SBA uses industry-specific size standards that are based on sales or number of employees. If based on sales, the threshold ranges from just under $1 million to $35.5 million, but most industries employ the $7 million benchmark level. If based on number of employees (capital intensive industries), employment levels range from 50 to 1,500 employees, but most industries employ the 500 employee benchmark level. For research purposes,the SBA generally uses firms with fewer than 500 employees.” See SBA.gov.
Just as agencies only care about corporate accounts with the deepest pockets, the SBA only counts and serves small businesses with significant financial resources. The majority of all small businesses and workers in the United States are considered unimportant by those whose only priority is maximizing profits regardless of the consequences.
How important are http://blog.viewbix.com/blogsmall businesses to the U.S. economy?
We ignore most small businesses at our peril. How can we, in spite of the fact that 99.7% of all employers are small businesses? Consider these stats from the SBA
• Represent 99.7 percent of all employer firms.
• Employ half of all private sector employees.
• Pay 44 percent of total U.S. private payroll.
• Generated 65 percent of net new jobs over the pasthttp://blog.viewbix.com/blog 17 years.
• Create more than half of the nonfarm private GDP.
• Hire 43 percent of high tech workers ( scientists, engineers, computer programmers, and others).
• Are 52 percent home-based and 2 percent franchises.
• Made up 97.5 percent of all identified exporters and produced 31 percent of export value in FY 2008.
• Produce 13 times more patents per employee than large patenting firms.
Source: U.S. Dept. of Commerce, Census Bureau and Intl. Trade Admin.; Advocacy-fundehttp://blog.viewbix.com/blogd research by Kathryn Kobe, 2007 and CHI Research, 2003 U.S. Dept. of Labor, Bureau of Labor Statistics.
According to the SBA, how many small businesses are there?
In 2009,there were 27.5 million businesses in the United States, according to Office of Advocacy estimates.The latest available Census data show that there were 6.0 million firms with employees in 2007 and 21.4 million without employees in 2008. Small firms with fewer than 500 employees represent 99.9 percent of the total ( employers and non-employers), as the most recent data show there were about 18,311 large businesses in 2007.
Source: Office of Advocacy estimates based on data from the U.S. Dept. of Commerce, Census Bureau, and trends from the U.S. Dept. of Labor, Bureau of Labour Statistics, Business Employment Dynamics. See SBA FAQs.
Why Agencies Target Large Companies
The short answer is that it takes just as long to selhttp://blog.viewbix.com/blogl a $50,000 service to a large company as it does to sell a $200 service to a small one. In order to maximize potential income, most B2Bs not only market specifically to businesses with deep pockets – they actually turn away any small jobs that come their way.
Why B2B Businesses Do NOT Know About Services They Need
Important services every small business should be using such as Universal Business Listings (UBL), Knowem, Alerti, ViewBix and other small business solutions are regularly written about on sites such as Forbes, and industry blogs such as Mashable, TechCrunch, SmallBizTrends and Social Media Examiner.
They are well known to agencies because of that coverage and because agencies attend major events such as Pubcon, Search Engine Strategies, Affiliate Summit, and Social Media Success Summit.
The owners and managers of 80% of small businesses will never use an agency.
They do not read Forbes or the NY Times. They do not spend their time reading SEO, Internet Marketing, or Social Media Marketing blogs. They do not attend any events outside their own industries – and most small businesses do not even attend events IN their own industry.
These events and publications only reach the largest of small businesses. For agencies, that doesn’t matter because these small businesses typically do not hire agencies.
Most Small Businesses will never use an agency,
read those sites, or attend those events.
For Alerti, Knowem, UBL, Viewbix and other small business solutions, there is a huge untapped market of businesses that can afford their services and definitely need them. And there is a way to reach these small businesses, but it is not content marketing, events, case studies, or social media.
What Small Businesses Are Unserved?
There are two major groups of people who can not be reached using the methods currently employed:
- Small local businesses with few employees such as convenience stores, restaurants, used car lots, vehicle repair shops, building contractors, real estate agents – even some smaller medical practices, doctors, nurses and dentists. (Some of these you are reaching, but many only read or attend events in their own industries – so if you aren’t represented there you won’t reach them.)
- Individuals who work for themselves providing services such as handymen, gardeners, pool cleaners, cleaning services, many plumbers, electricians and other service providers.
Obviously, there is some overlap as individuals get more work than they can handle and hire others to assist them – but because they worked their way up they will not suddenly start reading Forbes and knowing about Internet Marketing.
Size of Unserved Small Business Market
According to Scarborough, the number of small business owners in the U.S. between 2008 and 2012 ranged from 9.12 million down to 7.73 million as shown in this graph provided by Statista:
Note that small business numbers are declining – another reason why
small business solutions are growing in importance.
Small businesses must proactively grow their customer base – even if they have always
had enough business before – because as the value of the dollar drops and more people
are underemployed and unemployed their existing customers have less money to spend.
According to the Office of Tax Analysis Department of the Treasury report dated Aug, 2011 there are more small businesses than Scarborough reported and far less than SBA estimates. These are their most conservative – and most likely the most accurate – estimates:
- 4/5 of small businesses have 0 employees
- There are 9.4 million smbiz tax filers reporting $335 billion net business income.
- Only 8% of small business owners had AGI above $200,000 which was 57% of total business income. (43% of income came from the 11% of small business owners who earned more than $200,000 AGI)
- Slightly more than one-fifth of small businesses qualify as an employer. Employers were considerably larger than non-employers, reporting average total income of $922,100, compared to $99,900 for non-employers, and average net income of $45,300, compared to $15,500 for non-employers.
Note that the larger of these small businesses only have an average net income of $45,300. Unlike the accounting used by corporations and the more affluent, in most cases that will be what they are actually living on – not how much profit they had after they paid themselves a salary!
These numbers were taken directly from tax returns so they are more accurate than surveys. The bottom line for B2B services is this:
There are an estimated 9.4 MILLION small businesses who CAN afford
your services. How many of these are you currently serving?
These businesses CAN afford you – but not an agency.
They can afford to hire an independent consultant
who sells and uses your services on their behalf.
SmallBiz Owners Rank Assistance with Social Media Marketing #1 Need
Which marketing activities do small businesses believe they need the most help with? Social media marketing is #1. As of 2012, 66 percent of small B2C businesses and 47 percent of small B2B companies in the United States identified social media marketing as an area where they could use extra support. United States; Small businesses; 728 respondents; April 24, 2012 to May 8, 2012 Source: Constant Contact
Social Media savvy bloggers have the experience they need and more and more of them are making a living offering their services to small businesses. We need to expedite that process and make connecting them faster and easier.
Small Business Market Research
Almost all case studies and market research is done on behalf of Fortune 500 companies. Successful PR, Marketing, and SEO agencies primarily serve larger corporations. They then use these studies to advise small businesses even though they should know that what works for Coca-Cola or Nike is NOT necessarily a good strategy for even the largest small businesses.
The best market research and case studies are beyond the ability of most small business owners or managers to understand. MarketingPilgrim, MECLabs, Marketing Experiments, and Hubspot all produce exceptional research – but this untapped market I’m talking about does not read it and never will.
Why Bloggers Will Provide Support Services to Small Business
Small business owners are busy running their businesses. Many of them are new to using the Internet and may barely use email or a cell phone. They do not have the time or resources to learn to do what they need done.
Bloggers have spent the last 4-5 years honing what have turned out to be complex skills ranging from SEO to optimizing Local Search Directory Listings to content creation. Even after investing hundreds to thousands of hours they still have much to learn.
Just as larger businesses are NOT the primary users of services like UBL, Knowem, and Alerti – the agencies they hire are – smaller businesses are not going to be who actually uses your services. They do not know how and most of them are not likely to be willing to learn.
Agencies exist and deliver most of your business to you because business managers and owners are willing to pay to have someone else handle these challenges. Your untapped market will be reached by serious bloggers turned consultants who will actually be using your services on behalf of an ever growing percentage of those 9.4 million small businesses.
Who Will Train the Bloggers to Act as Small Business Consultants
While most bloggers originally are self taught, they eventually start sharing what they know with each other. Loose collaborations turn into more formal mentoring programs. Experts with particular skills become well known and they become the support system. Leaders teach the best and brightest and they identify leaders who then become the next level of mentors.
Just as corporations use VARs (value added resellers) to sell and
provide support, solutions providers need to support mentoring
programs that teach the importance of using their services.
The way that UBL, Knowem, Alerti, and any other B2B service will gain market share is by supporting the early leaders who provide free support to those they train to use your services.
Where Bloggers Need to Focus Their Efforts
There is no guarantee that any site will last forever and your time and efforts there may be lost – so choose where you spend your time wisely. What I predict will happen is that leading influential social media savvy bloggers will join together to create geo-targeted group blogs where local communities will form.
I explained why local is where the money is for bloggers and provided examples of sites in How Social Networks Are Restoring Human Connections so you can see what we need to be doing.
- Leaders will not have any out-of-pocket expenses. All overhead will be covered and income the site generates will cover cost on those expenses.
- Joint venture / revenue sharing model allowing bloggers to make money leading to being able to make a living.
- Identify educators and provide them with a curriculum so that students can provide content. Their assignments will give them real world experience doing what benefits their own communities and be able to generate income.
- Students showing promise will receive free mentoring and internships (unpaid at first, but quickly working into paid work) and actually create their own jobs.
- Local businesses will benefit as students write about their favorite restaurants, cars, movies, gathering places, events, etc.
Unlike the typical traditional model where only those businesses that
can afford advertising get exposure, bloggers and students will write
about those they like best, giving them valuable free visibility.
Our USP is that the most deserving get featured -
not only those who can afford to buy advertising.
We need to stop telling small businesses they need their own blogs. Few of them have the time or resources to manage a blog. What they need is to own their own domain name they can point at whatever page or post best explains what they have to offer their target audience.
With many bloggers working together to create the best sites for any given geographic location, those sites will become well known. As their incomes increase, they can add traditional offline advertising to free methods employed both online and off.
They will not be reliant on the ever fickle algorithms of Google. We will roll these out first in college towns where they will naturally go viral. Together we can create a small business revival that turns the economy around – at least for those who recognize the connection between where you spend your money and economic survival.
If you offer a service small businesses need or
are a small business consultant or a blogger
interested in working with small businesses,
leave a comment in this post or contact me.
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