It is typical for individuals who promote goods and services to small businesses to create an inner lingo of buzzwords and acronyms to serve as shorthand for lengthy phrases or recurring ideas. Marketing strategies for reaching small business decision-makers typically describe the customer by the size of a company (revenues or employees), the industry “vertical,” or other factors like the location because business-to-business marketers are unable to do what consumer marketers can when they describe customers as a set of demographics (for example, women, ages 18-21). Because of this, the terminology used as substitutes for consumer-like demographics has developed into:
- Small office/home office (SOHO)
- Small and mid-sized (or medium-sized) businesses (SMB)
- Small and medium enterprise (SME)
Those designations may make sense in terms of marketing strategies. However, there’s a good chance that you don’t know what any of those phrases truly represent if you are a small business itself and not a marketer to small businesses. And even if you did, you probably want the term “small business” to be used to describe you.
When strategy words escape the marketing department.
Developing and managing a marketing strategy involves the use of inside-baseball marketing terms that, by accident, become so ingrained in a marketer’s vocabulary that they begin to creep into conversations with people who, based on the expressions on their faces, have no idea what we’re talking about. Oddly enough, it doesn’t stop us from utilizing them. We even begin calling goods and services using abbreviations that the intended market never employs (see graphic below).
The problem with using “strategy labels” like SMB or microbusiness when communicating with customers.
If you were a consumer marketer, I doubt you’d ever accept the phrase “This Bud’s for Males, 21-34,” even if it is rather common to speak in the marketing department in terms of demographics and target markets. But when you give something the “SMB Solution Center” moniker, you do that.
When marketing to small business owners and managers, use the labels they use.
The next time you speak with one, pay attention to how the manager or owner of a small business identifies himself or herself. You won’t find an acronym in that statement (unless they are a CPA, or perhaps, an ENT). They’ll introduce themselves by saying things like, “I’m an electrician,” “I own a company,” or “I have a bike store.” They will use words like “small business,” “family business,” or “independent business” to set their enterprises apart from other kinds of businesses that they are aware people associate negatively with (as I’ll discuss in a moment). Even those who own and operate quickly expanding small firms seldom ever refer to themselves as entrepreneurs. However, they have ceased correcting anyone who claims to be them in recent years. Most small company owners believe the phrase refers to someone else, even though they may respect entrepreneurs.
In my thirty years of selling goods and services to small company owners, I have never once overheard a small business manager or owner refer to themselves or their firms as a microbusiness, SOHO, mid-sized, or SMB.
Small Business owners and managers want their companies to be called small businesses because they view it as a competitive advantage
The 2010 Pew Research survey results may provide insight into why a company of any size might choose to be categorized as a small business. The Pew poll found that Americans trust “small business” institutions even more than they trust universities and religious institutions.
When the U.S. military was included in an identical study performed by the Gallup organization last year, “the institution of small business” rose to second place. Nevertheless, the results indicate that there is a lot of support for small enterprises in the market. A “small enterprise” may be relied upon. Being someone else makes one less trustworthy.
The term “small business” has statutory definitions that benefit a wide variety of businesses, and that are baked into thousands of state and federal laws, regulations and administrative codes.
A tiny firm (or even a mid-sized one) may desire to use the term “small business” for other, more pragmatic reasons that are focused on the bottom line. The enormous compilation of all U.S. statutes, the U.S. Code, contains 996 instances of the phrase “small business.” The frequency at which the following words appear in the code is as follows: SMB: 0, Microbusiness: 0, Mid-sized business: 0. The definition of small business has been established and codified by the U.S. government (and like most government inventions, it’s extremely complex), unlike the marketing-department strategy words “mid-sized,” “SMB,” or “microbusiness.” Almost every federal legislation that appropriates money for the government has wording mandating that some of that money be used with businesses that are identified (and defined) in the law as “small businesses.” Visit this Small Business Set Aside FAQ on the U.S. General Services Administration website for an illustration. It is possible to prevent a business from being subject to certain rules or taxes by understanding what a small business is. Those who manage small companies don’t spend any time wondering if they fall inside the limitations of metrics invented by marketers since things like SBA loans and government contracts depend on having a very specific knowledge of what the phrase “small business” legally implies. They place greater importance on fitting the government’s definition of a small business than, example, Walmart’s Sams Club’s goal to reclassify a sizable portion of small companies as “microbusinesses.”
Multiply the following by 50 states: The House Committee on Small Business, The Senate Committee on Small Business and Entrepreneurship, The Small Business Administration.
The process of codifying the phrase “small business” has taken place over a period of six decades, as was mentioned in the preceding paragraph. Each state and territory refers to organizations, groups, and initiatives as “small businesses.” On the façade of an office building in Washington, DC, the phrase “little company” is inscribed in stone (see graphic). Any technique that looks to divide the dependable category of “small company” into smaller groups named “micros” and “mid-sized” would seem to be a divide-and-conquer tactic and might harm the capacity of small companies to communicate as a unit.
Competitive Advantage vs. Differential Advantage
A company has a competitive advantage when customers see its goods and services as superior than those of its rivals’. Differential advantage is fueled by better employees, patent-protected goods or processes, cutting-edge technology, and strong brand recognition. Wide margins and substantial market shares are supported by these variables.
Apple is renowned for developing cutting-edge goods like the iPhone and sustaining its market dominance through astute marketing strategies to create an exclusive brand. Because branded pharmaceuticals are patented, major pharmaceutical corporations may sell them for premium prices.
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Small Business Saturday
When American Express decided to sponsor “Small Business Saturday” five years ago, they shut the door on anyone who might have preferred the name Microbusiness Saturday or Small and Mid-sized Business Saturday. To put it another way, tens of millions of dollars have been invested in a campaign that promotes small companies, whatever of size, to identify as such on the Saturday after Thanksgiving.
And finally: No one has ever said the following sentence, ‘My goal in life is to one day start and run an SMB.’
Once more, there is nothing wrong with utilizing any acronym you choose while talking about marketing strategy in private. However, when you start utilizing terminology like SMB, those who are unsure about what they imply will likely Google it. They’ll be even more confused to learn that the first few links on the Google search results page will inform the small business owner that an SMB is a “Server Message Block” that functions as an application-layer network protocol primarily used for providing shared access to files, printers, serial ports, and other communications between nodes on a network.”