Selling to SMBs

According to the U.S. Small Business Administration, there are approximately 30.2 million small businesses in the United States. As such, software sales professionals who overlook the potential advantages of selling to small and midsize businesses (SMBs) are missing out on a potentially very profitable resource. Just what exactly is an SMB and what are the specific advantages of catering to them when selling software or other products?

What is an SMB?

SMB stands for small and midsize business. While by some definitions, small businesses are those with fewer than 100 employees and midsize businesses have fewer than 1,000, the numbers can be subjective. Often, however, SMBs can be identified by the unique challenges they face, such as lower annual revenue and less room for error.

What challenges do SMBs face, and what do these challenges mean for software sales?

There are a handful of reasons why selling software to SMBs presents a different set of challenges than selling to enterprise-level businesses. For one, SMBs have fewer resources, and what resources they do have tend to be less liquid. Another reason is that small business owners are busy working to advance their company goals during optimal business hours (Monday–Friday, 10 a.m.–12 p.m. and 1 p.m.–3 p.m). These owners seldom have much in the way of available time, so for sales teams, getting a face-to-face meeting with key decision makers can be a herculean task in and of itself.

Additionally, the leaders of SMBs often find themselves sitting in much more precarious positions in terms of their business. Mistakes, even small ones that enterprise-level business leaders are able to shake off with little trouble, can mean disaster for certain SMBs. Mistakes have the potential to drive SMB leaders into a defensive position, making them less likely to take chances and more prone to risk aversion. This all makes selling small businesses even on lower-end deals somewhat difficult.

But does that mean that SMBs are more trouble than they’re worth? Given that SMBs account for 99.9% of U.S. businesses and employ 58.9 million people in the U.S., those salespersons who choose to overlook the SMB market are missing out on a major resource.

As such, sales professionals need to make a strong case demonstrating that the goods or services they’re offering will provide a significant ROI. For this reason, the best way to approach small business sales is to understand how their goals and pain points differ from enterprise level businesses. Before we move on, let’s list a couple of these differences:

1. Not all SMBs want to grow (and not all of them should).

   The famous naturalist author Edward Abbey once said, “Growth for the sake of growth is the ideology of the cancer cell.” If you narrow the context down to SMBs, this quote rings especially true. To put it plainly, overexpansion is one of the leading causes of SMB failure. It’s also, arguably, the most tragic, because it means the end of organizations which could otherwise find success. Some small businesses are positioned to benefit more from focusing on stability and self-sufficiency, than from setting their sights on exponential growth.

2. Scalable operational expenses are preferable to big purchases.

   Back in the days of traditional client-server software packages, technology trends favored large enterprises. That’s because they entailed a big, expensive cash commitment upfront, backed by a staff of in-house IT professionals for implementation, maintenance, and security. Very few SMBs had resources for those kinds of purchases, and those that did often preferred to avoid such large expenditures. Recently, however, software as a service (SaaS) has changed the game. By making day-to-day infrastructure needs into a monthly operational expense that can be scaled up or down as an organization’s needs evolve, many SMBs can now afford technology upgrades that were previously unavailable to them.

If you have a product that can be presented as something that improves stability or provides scalable month-over-month operational solutions, then you’ve met all the basic criteria for selling to small business. Better yet, if what you are offering involves training or software that teaches SMB owners how to increase business sales in a small business, then that product will essentially sell itself. And if you are able to demonstrate the value of your product and continue to support successful small business clients beyond the date of their purchase, they will remain loyal for a long time to come. On the other hand, if what you have is little more than a watered-down version of an enterprise product — something that isn’t appropriately scalable — then taking it to SMBs may not be the right choice.

Thanks to the growing market for software as a service, storage as a service, and security as a service, small businesses are able to reap the benefits of technology at the same or similar pace as larger enterprises. Nationwide, SMBs are spending larger portions of their revenue on technology. Of course, they also spend on more traditional costs as well, such as office equipment, transportation and shipping, financial services, and marketing. So, despite tight spending and time constraints, SMBs are always in the market for something. If you think you’re selling something a small business might want, here are some tips for how to go about it:

1. Respect the owner’s limited time.

   When it comes to selling to SMBs, you need to be the flexible one in the relationship. Setting prices, devising service terms, and even worrying about your competitors will all take a back seat to getting SMB owners to give you their precious time. Make it a rule to set and keep appointments on your end, but remain flexible so as to accommodate changes on the end of your client.

2. Keep exchanges small, intimate, and down to earth.

   A small platoon of slick-looking, stuffy corporate types is the last thing most small business owners want to have to deal with, especially when it comes to making sales-related decisions. Most small business owners are average Joes and would prefer to do business with someone similar. If you’re going to get to know the prospect’s personal pain points, as well as their company pain points, you need to position your approach so a personal relationship can be built. CRM platforms that help to organize and facilitate the seller-buyer relationship can make a significant positive difference in this respect.

3. Focus on ease of use.

   No matter what you may be selling, the small business must be able to implement it seamlessly into its existing processes. SMBs generally don’t have the stability necessary to take a break from doing business to learn new programs or restructure their architecture so they can take advantage of something that doesn’t integrate as naturally as it otherwise could. Basically, if what you’re selling isn’t easy to use or easy to switch over to, you aren’t doing yourself or a small business owner any favors. Ease of use will help you make considerable gains in customer acquisition and will be likewise valuable to the business owner when the company starts to scale with volume.

4. Stand behind your product or service.

   You should be able to share relevant data that demonstrates a measurable and trackable ROI to your customers. Backing that up with a performance guarantee and stellar customer-service policies will go a long way toward removing anxiety from their purchase decision. In fact, if you have a valuable product or service that is being pitched correctly, the only anxiety your potential client should feel is the anxiety of what might happen if they don’t take you up on your offer.

As mentioned earlier, not all small businesses want to grow, but for those that do, the right solutions might be exactly what you are offering. So do them a favor, and present your solutions in a way that is accessible, respectful, and honest. By helping SMBs become something more and being a part of their growth strategy, you’ll end up with a long-term relationship that will not only bring you a considerable ROI, but might also help your client achieve something great.