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Small Businesses and Their Web Presence

by: David Alford

When it comes to small businesses having a website, size really does matter. The larger the size of a small business, the more likely it is to have a website. The smaller the business, the less likely it is to have a website.

According to a survey conducted in September 2008 by Barlow Research of 680 small businesses, drawn from the Dun & Bradstreet list, ranging in size from $100,000 to $10 Million in annual revenues, here is the overall breakdown:

49% of small businesses - currently have a Web site
13% of small businesses - do not have a Web site but plan to within the next 12 months
38% of small businesses - do not plan to have a Web site within the next 12 months

However, averages can mask the true picture. If you break down the Barlow Research numbers by size of business, the data gets really interesting.

Percent of businesses that have a website, by annual sales size:
45% - Revenues of $100,000 to $499,000
49% - Revenues of $500,000 to $999,000
69% - Revenues of $1.0 Million to $2.49 Million
67% - Revenues of $2.5 Million to $4.9 Million
73% - Revenues of $5.0 Million to $10 Million

And what about midsize businesses? For businesses with revenues of $10 Million to $500 Million in size, 84% have websites.

This data brings me to several insights I’d like to share:

(1) When marketing Web-related services to small business prospects, one size does not fit all. It’s tempting to lump all small businesses together, but as the data shows, you will want to make distinctions based on size of the business. There are huge differences between a business with $120,000 in annual revenues, and one with $5 Million in annual revenues — even though both are called “small businesses.” There are differences in how big their expense budgets are; the benefit to be derived from having an online presence; and so on.

(2) Consider the needs of the business. If we had industry data, I bet we would see patterns among industries, because some industries and lines of business have a bigger need for websites than others.

I know all of us proponents of the Web would like to think that EVERY small business NEEDS a website. However, as a practical matter, some need a website more than others.

For some small businesses — say a local plumber who serves a handful of established commercial accounts and works through referrals from builders — a website may not help him get more business or serve customers better. Over the next few years that will change as Yellow Pages books completely disappear and being online is like breathing air. But that won’t happen before you make that sales pitch next week.

Here’s another example: a solo marketing professional with under $300,000 in annual revenues probably values a website as a business tool far more than a $9.0 Million manufacturing shop which may still be in the “why do we need a website?” mode.

(3) Segment, segment, segment! Define who your ideal small business customer is with great specificity as to size, industry, Web sophistication, online needs, and similar attributes. This will help you to:

• Better match your offerings with customer needs — If you are offering “starter” websites, you’d be better served to go after the smallest businesses. More advanced services, such as PPC campaign management, are better suited toward larger businesses. You have probably figured this out already, but it pays to regularly cross-check to make sure your offerings are still aligned with your target customer — and that your sales team understands this. It is easy to stray off track.

• Charge a price point that will fly with your target customer — Your customers’ budgets have a marked effect on what they are willing to spend, obviously. Offer small businesses choices, i.e., stratified pricing options and possibly a menu of ala carte offerings that add more functionality or service for a higher price.

• Offer differentiated products and services to provide a migration path to upsell as your target customer grows. Small business customers do not stay stagnant. Their needs will change over time. Are you positioned with the right products to continue serving them as they grow and become more Web-savvy and prosperous? If you can’t provide the migration path directly, what about partnerships that will give your customers what they need even if you can’t?

• Tailor your marketing to hit the mark more closely — For instance, don’t do mass direct mailings to every small business within a 50-mile radius, using the same marketing message. It will be a waste. Try to break your targets down by size and, if possible, industries and business types that need a web presence and/or the kind of Web services you are offering. And tailor your messages accordingly.

Linda O’Connell, Managing Director, Small Business Banking, of Barlow Research adds: “As we remind our financial services clients, beware of small business averages.

With small businesses characterized as a large and diverse market based on many demographic elements, it is important to understand the niche that you are trying to attract. Fortunately, research resources are available to help the small business marketer drill down into the data to design the product and direct the message to the appropriate segment.”

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