One of the most popular online target markets for major corporations is small business – and all for good reason. While no one knows for sure how many small businesses there are (because many are part-time businesses or tax shelters), the U.S. Small Business Administration has put the number at about 25 million, give or take a few million. Perhaps more importantly than the actual number is the fact that the market has been growing fast. In fact, estimates of new businesses started each year are in excess of one million.
Many large corporations, especially those in the financial services arena, want nothing more than to be big players in this growing market. Nearly any financial services company worth its salt has erected a “small-business resource center” on the Internet. American Express calls its center “Voices from Main Street” and has been plugging it intensively on television. Visa’s center is appropriately named “Business Resource Center.” And Bank of America has a “Small Business Center.”
These companies mostly follow a similar format of relaying information about the corporation’s products for small businesses. In the case of American Express and Visa, this means everything you want to know about obtaining credit cards and doing e-commerce on the Internet. At Bank of America, it’s about special banking services for small businesses. There are also generic “how-to” articles about such matters as combating fraud and writing a press release.
Creative touch. There are some impressive efforts at creativity. American Express has a contest designed to find the 100 most promising small businesses via their business plan submissions, and then provide them with services from various partners, like web site and online advertising. Eventually, one business is selected as the best and wins $100,000.
Yet, some such efforts fall a bit flat. Take the American Express offer that will exchange business tips with Magic Johnson in a chat session. I don’t know about you, but I’ll save my basketball questions for Magic and take my business questions elsewhere.
The challenge that all the corporations face is that small businesses increasingly don’t fit into the “Main Street” mold. Not only are entrepreneurs getting younger, but they aren’t starting hardware stores and dry cleaners at least on Main Street. If they’re doing anything associated with hardware and dry cleaning, they’re doing it on the Internet, and raising $5 million or $10 million in venture capital funds to expand the businesses.
Need for focus. This is where many small-business marketing efforts stumble. (i.e. in crystallizing the target market.) It’s not that these corporations don’t know what they’re doing, it’s that the small-business market is increasingly becoming more complex.
So while the efforts of many of these online small-business centers are admirable, they face a number of challenges, three of which are key:
First, the small-business market has changed dramatically over the last few years, thanks to the Internet. Whereas small businesses were traditionally viewed as needy and downtrodden,and starting one, a very risky proposition, the situation today is much different. Major corporations now respect the aspiring entrepeneurs. (having had enough lunches eaten by the upstarts). And starting a new business, while not routine, isn’t quite the big deal it once was, thanks to much lower barriers to entry and the ready availability of capital.
Second, focusing on small businesses as a target market is difficult. Should the target market be technology start-ups, established fast-growing businesses, stable lifestyle businesses, professional service firms, or some combination? At American Express, much of the focus appears truly to be on Main Street types of businesses. But then stuck in among various articles is a whole series, “Internet Startup Workshop,” led by an article, “Can You Win the Dot-Com Investor Game?” Not that there’s anything wrong, it just suggests a lack of marketing focus.
Third, the corporate sites face serious competition for small business’ mindshare from various online ventures. In any offering such as a small business resource center, sponsoring corporations need to consider the value proposition. What benefits are small businesses actually receiving from the site? For example, Federal Express just announced a service that will allow small businesses to build an online store. Nice idea, but any number of sites like Webnow, Bigstep.com, and vJungle.com, among many other upstarts, offer small businesses significant free similar services like web site templates, Internet hosting, e-commerce, marketing, and calendar services.
Given these issues, it’s extremely important for corporations chasing the small business market to decide in advance which segment(s) are the targets, and what content and other offerings are most likely to work best.
The small business market is tantalizing and elusive. Major corporations will likely need to work harder than they think to obtain the desired return on investment.