Defying Definition

At this year's U.S. Small Business Administration (SBA) Small Business Week Conference, attendees were told that that the economy was being driven by "25.85 million U.S. small businesses."

As compelling as that number is,it's clearly overstated. Considering that total U.S. employment currently stands at 146 million, it means that, according to the SBA, one in six workers in this country is a business owner.

Take it from the source
The problem is a lack of reliable government data. The National Federation of Independent Business (NFIB), representing half a million U.S. small business owners/members, is the largest small business public policy group in the nation. The NFIB discovered that the SBA counts any business tax filing as a business, a number it has pegged at 19,523,741. That means the SBA is counting paper corporations, limited partnerships, services firms with multiple "dbas" and perhaps hundreds tens of thousands of salaried employees who moonlight by taking on a $2,000 consulting job during the year as small businesses.

Among the more accurate surveys of the U.S. business universe are AMI Research's Business Market Studies. The data in the accompanying chart (left) offer a breakout of company size by employee numbers, which offers a more realistic view of business segments.

Employment statistics are one way to define small business; placing an emphasis on what a small business prospect's annual revenue may be is another.

Taking variations into account
The Small Business Act, which created the SBA, defines a small business as "one that is independently owned and operated and which is not dominant in its field of operation." But the law also says that what constitutes a small business will vary by industry to accurately reflect the differences of each one.

That's spot on. A real estate firm reporting sales of $30 million might have real revenues of about $1.8 million in cash flow, a few assets and even fewer employees other than outside sales contractors. A $30-million manufacturing company, on the other hand, may have as much as three times the cash flow, 100 employees and millions of dollars of value tied up in its plant, equipment and inventory.

Some marketers look for segments within small business with an eye toward those alreadygenerating the most activity and greatest potential for repeat business. Marketers of overnight delivery services, for example,have identified and targeted financial, insurance and real estate businesses-those small businesses that consistently demonstrate a critical need for the timely delivery of original documents. Likewise,some technology firms target "information-intensive" small businesses (e.g., accounting, warehousing, manufacturing and healthcare).

Banks serve the majority of their small business clients at the branch level; however, many also have a mechanism in place to trigger a direct sales call when a business customer's account reaches a certain level of assets and activity. For some banks, that first direct sales call comes at the $1 million "activity level" while for others it may be higher or lower.

So how do you sell into such a diverse market, typically referred to as a "single" market? In a word, targeting. It takes knowing your customers and delivering relevant, value-added information designed to help them manage risk, and save time and money. When you address a customer with knowledge of their business, you increase relevancy exponentially. And relevancy is the foundation of driving customer engagement\a connection between your brand and the customer that can pay enormous dividends throughout the customer lifecycle.