The Rise of the Small Business Market (Observations from “Circle One”) *

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Dear friends,

 Over the last few weeks, I found myself exploring startup companies that address the “SMB Market”, and even just the SB (Small Business) Market. While we all know small businesses around the world are an important economic growth engine, and even more importantly, an “out of poverty” growth engine, still, most of the investments are targeted at either the upper side of the market (large scale enterprises) or the lower side (consumers), where market sizes and opportunties are percived to be bigger.

 Small businesses tend to pay small checks, and scaling out seems to be a challenge, not to mention that marketing efforts required to reach out to many of them are expensive. I always felt that small businesses are falling “through the cracks” so to speak. The big enterprises offer larger deal sizes, even if the sales cycle is long due to complex decision-making processes. Targeting customers and partners seems to be clear, as they are simply more visible (“Fortune 500” and other groupings help better define the target market).

 On the other hand, those who have addressed the consumer markets sucessfully have became big players in the innovation market. Billions of dollars have been invested in order to address the consumer buying power, riding on the growth of middle-class consumption and the fact that technology is more pervasive than ever before. Even more is being invested now in new ways of marketing, leveraging the social networking penetration worldwide. The Internet has made us all much more accessible to the big B2C players.

 However, if we look at the small business market as an upgraded “consumer market”, as opposed to seeing it as a downgraded “enterprise market” – and instead, if we think about it as a B2SB (“Business-to-Small-Business”) relationship – we may discover a world of opportunities of which many have neglected. For example, DudaMobile (www.dudamobile.com) , a Pitango portfolio company, helps small businesses turn their website into a mobile website automatically and in a few minutes, empowering their entrance to the mobile world. Another company, LoyalBlocks (www.loyalblocks.com) helps small businesses create “Loyalty Clubs”, drive sales, and solve problems such as filling in slow hours, etc. Finally, another startup company I saw recently helps small businesses be more effective as they utilize their presence on Facebook, Linkedin, and the likes.

 Small businesses are usually like small ponds. They are local, challanged by the weather, and limited by the number of visitors… However, technology and innovation can help them increase their market reach, grow their audience, and make them stronger – just like a small ocean… With the rise of the global startup phenomenon, I believe we will see more startup companies focusing on the small business market. By doing so, the economy will benefit twice – both from growing additional  successful new startup companies, and from the empowerment and success of small businesses.

 

*This blog is published in Hebrew at the Israeli newspaper Calcalist at http://www.calcalist.co.il/internet/articles/0,7340,L-3610983,00.html

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