Targeting the right customer base is essential to any entrepreneur’s success. But within the startup community, it often seems like there are only two markets getting attention from tech entrepreneurs: consumer and enterprise.
The consumer market is where huge customer numbers and front page-making acquisitions are found. The enterprise market has the growing attention of venture capitalists.
However, there is another lucrative market out there, growing at a rapid pace and eager for new technologies: small businesses.
Below are four reasons why you should look beyond the consumer and enterprise markets for your next venture and focus on small businesses.
1. The small business market is huge and growing. There are 27 million small businesses in the United States alone -- that’s about one for every 11 citizens. When you consider that small businesses have generated 65 percent of net new jobs since 1995, the scope of the market your solution can assist is really impressive.
The market continues to get larger as well. Since 1982, the number of small businesses in the United States has increased 49 percent. This includes not only the local stores in your town center but also the recent explosion of freelancers and “solopreneurs” who rely even more on innovative solutions to supplement their lack of staff.
Ultimately, we’re witnessing a not-so-gradual shift towards an economy increasingly focused on small businesses in real need of technologies to bolster their success.
2. Small businesses are ready to invest in solutions that will help them grow. According to Wells Fargo, small-business optimism has hit pre-recession levels. They generally feel good about their future, and this should give entrepreneurs reason to feel good as well.
Additionally, 81 percent of small businesses expect revenues to rise over the next 12 months and 64 percent are reporting healthy cash flow. These are businesses that are looking to invest in their future and find the right solutions to take their offerings to the next level.
3. Contrary to popular belief, they are embracing technology. The first image that often comes to mind when discussing “small” or “local” businesses is the local mom-and-pop store. It’s probably in a small town center, and “technologically advanced” is not usually an adjective used to describe them.
It’s time to erase that assumption, as small businesses across the country are embracing newer technologies. Ninety percent of small businesses use social media and more than half have increased their social spend over the past year. They are also starting to use big data, with 18 percent of small businesses investing in intelligence and analytics solutions.
The mom-and-pop store built on technology is here. Entrepreneurs that can develop solutions in the digital marketing, big data and mobile arenas for them are well-positioned to capitalize on the success of the small-business market.
4. Small businesses represent a “third way” to other markets. The “third way” usually conveys a middle ground between political parties. Here, I would like you to think of the small-business market as a third way between enterprise and consumer markets.
While they exist on different scales, many issues facing larger enterprises today (for example, finding effective and economical marketing solutions, mobilizing the workforce) are also pertinent to small businesses.
From the consumer perspective, the majority of customers seek ease of use and simplicity in the technologies they use, much like small-business owners who wear many hats and need to easily master technologies they adopt.
So it’s not a stretch to say that if your product or solution sees success in the small-business market, it may, with some revisions, become successful in either the enterprise or consumer markets.
If you have a great idea in search of an audience, it may be tempting to follow others who have seen success in the enterprise and consumer markets. However, you may be able to find the market most in need of your idea by going down to your local town center and walking into one of those great, small establishments.
You’ve grown to love them -- now you can help them grow.
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