What Is an SMB?

The term ‘SMB’ holds significant relevance in the business world, representing a vital segment of the economy characterized by its dynamism, diversity, and entrepreneurial spirit. According to SBA, there are 33,185,550 small businesses in the United States. This data further confirms that most American businesses are small, which is a staggering 99.9% of all US businesses.

For agencies or consultancies looking to scale, the SMB segment represents a significant growth opportunity due to its sheer scale and economic impact. In fact, SMBs are pivotal players in the global economic landscape. These businesses, characterized by their modest size but substantial impact, form the backbone of many economies around the world.

In this blog, we’ll not only learn the full and correct definition of an SMB but also explore the types of businesses that fall under this category, the challenges they encounter, and provide valuable insights for salespeople targeting this market, with a particular focus on B2SMB dynamics.

Defining SMB: Unraveling the Acronym and Industry Standards

SMB stands for ‘small to medium-sized businesses’, a diverse group encompassing enterprises that vary widely in terms of size, revenue, and industry. These enterprises occupy the space between large corporations and micro-businesses.

Gartner defines small businesses as organizations with “fewer than 100 employees” whereas “midsize enterprises are those organizations with 100 to 999 employees.”

Next, in terms of revenue, “small business is usually defined as organizations with less than $50 million in annual revenue; midsize enterprise is defined as organizations that make more than $50 million, but less than $1 billion in annual revenue.”

The organizational structures are also quite contrasting! While small businesses are often managed directly by the owners, mid-sized businesses possess a more developed organizational structure with distinct departments and management hierarchies.

Even so, these standards may vary depending on industry, business type, location, etc.

Industry Differences: Industries vary in scale and dynamics, affecting SMB categorization. For example, a manufacturing business with 500 employees may still be “small,” while a 100-employee tech firm might be “medium” due to revenue potential.

Business Type: Classification depends on the business structure. A small family-owned store may be seen as a “small business,” while a similar-sized tech startup might not due to its scalability.

Regulatory Bodies: Governments and institutions define SMBs differently, focusing on factors like employee count, revenue, or credit needs to determine eligibility for incentives or loans.

Sector-Specific Standards: Classification can shift within industries; for instance, a 200-employee construction firm may be “medium,” while a restaurant chain of the same size might be “large.”

The industry or category classification allows you to go a level deeper in understanding SMBs and their fabric. Government classification systems such as NAICS, SBA, and SIC do a fair job of classifying the vast universe of businesses based on their primary business activities. Understanding SMBs within the construct of these classification systems greatly simplifies how you interact with them and tailor-down your engagement to specific niches.

As an SMB-focused seller, you must also keep in mind that small to medium businesses exist in all shapes and forms, for instance, they can range from B2Bs (business-to-business) to B2Cs (business-to-customer). Plus, local businesses often align with the SMB classification due to their size and localized operations. This connection emphasizes the symbiotic relationship between local businesses and the broader SMB category.

Understanding these variations is crucial for accurately assessing the landscape of your target SMBs and the unique challenges and opportunities they face in different contexts. And it is because of such versatility that selling to SMBs calls for a more tailored approach to provide support and resources to these vital economic entities.

The Unique Characteristics of SMBs: A Business Construct Overview

Understanding the unique business construct of SMBs is essential for sales professionals aiming to cater to this segment effectively. Here are some key characteristics that define SMBs:

Limited Resources: SMBs often operate with limited resources compared to larger corporations. This influences their decision-making processes, making cost-effective and high-impact solutions more appealing.

Local Focus: Local businesses that frequently fall within the SMB category, have a strong local focus. This localized approach is integral to their success, emphasizing community engagement and personalized customer relationships.

Agility and Flexibility: SMBs possess the agility to adapt quickly to market changes. This flexibility allows them to capitalize on emerging opportunities and pivot strategies as needed.

Hands-on Decision-Making: In SMBs, decision-making is often more hands-on. Owners or key stakeholders are directly involved in strategic choices, making personal relationships and trust paramount in business partnerships.

SMBs are different from enterprises—from their business requirements to how they access and consume technology.

Here are 6 exclusive SMB intel to stand out in your sales efforts:

• SMBs Have Different Goals: SMBs focus on growth, sustainability, and efficiency, often prioritizing immediate needs over long-term ambitions.
• SMBs Assess Their Needs Differently: SMBs evaluate products and services based on practical impact, affordability, and scalability rather than prestige or advanced features.
• SMBs Respond to Triggers and Make Decisions Differently: Decision-making in SMBs is often quick and influenced by immediate emotional, aspirational, and market-driven challenges or opportunities. Being proprietor-run, family-owned, resource-crunched, community-serving entities, they manage all of these ‘triggers’ a bit differently than larger businesses.
• SMBs Often Use Inconsistent Identities: SMBs may have varied branding across platforms, reflecting their evolving strategies or resource constraints.
• SMBs Require Personalized Communications: Tailored messaging that addresses their specific challenges and goals is essential to engage SMBs effectively.

This different and diverse nature of small and medium demands a shift in mindset. This approach involves seeing SMBs not as smaller versions of large corporations but as distinct entities for more effective SMB prospecting! Let’s explore some of the often overlooked yet strategic differences that force B2SMB sellers to push the layers of SMB prospecting and treat them differently from enterprise sales:

• Intent Data
  There is no accurate way to gather intent data in the small business space. It’s generally easier to assess an SMB’s “need” than “intent”.
• Unique IP Address
  SMBs May Not Have a Unique IP Address: Many SMBs rely on shared networks or cloud services, which complicates their use as a dependable proxy for identification.
• Contact Data
  The message is more important than having specific contact information. The message will find its way to the decision-maker.
• Generic Email
  Most often, SMBs create generic emails like info@, sales@ to look like a big company. However, these emails all get redirected to a handful of decision-makers. These emails are a good conduit for decision-makers.
• Onboarding
  The first 90 days are crucial to gaining confidence in the product, and getting it used regularly.

Personalization Is the Key to Winning Over SMBs

Companies selling to SMBs need to recognize the significance of personalization in their approach. Generic strategies often fall short when dealing with small businesses that thrive on personal connections and community engagement. Here are some specific ideas to enhance success when selling digital marketing products and services to SMBs:

Localized Content and SEO Strategies: Tailor your content to resonate with the local community. Highlight how your digital marketing solutions can address specific needs or challenges faced by businesses in the area.

Understand Industry Nuances: Different industries have distinct requirements. Take the time to understand the unique aspects of the industry in which your potential SMB clients operate. This knowledge will enable you to craft targeted, rather hyper-personalized messages that speak directly to their pain points and aspirations.

Flexible Solutions: Due to tight budgets, small and mid-sized businesses require flexibility in their marketing solutions. Offer customizable packages that cater to the specific needs and financial constraints of small businesses.

Community Engagement: Demonstrate your commitment to the local community. Sponsor local events, collaborate with other small businesses, and showcase your involvement in community initiatives. This not only enhances your brand image but also fosters trust among SMBs.

Utilize Data Analytics: By providing actionable, data-backed insights to your clients, you can show them the measurable impact of your digital marketing strategies on their business growth. SMBs appreciate tangible results and a clear return on investment.

The SMB segment represents not only a cornerstone of the economy but also a dynamic opportunity for sales professionals to innovate, adapt, and excel. SMBs are not just scaled-down enterprises; they are agile, community-focused entities with unique challenges and goals. By understanding their distinct characteristics and leveraging personalized marketing, localized engagement, and flexible solutions, you can build trust, foster meaningful connections, and drive mutual growth.