SMB Business Challenges: A Shift in the Rankings
Each month, Bredin surveys 500 principals of U.S. SMBs in our shared-client survey the SMB Pulse. This month, the results confirm some longstanding trends — and provide a few surprises, which speak to the outlook of SMBs and your opportunities to engage with and sell to them.
Very Small Businesses: New Customers First
Among SMBs with fewer than 20 employees, the biggest business challenge — with 35% rating it very challenging — is “finding new customers.” They are perennially challenged by customer turnover and uncertain cash flow. (“Managing costs” is their second-biggest challenge.) VSBs focus on new customer acquisition not just for growth, but to keep the doors open. As a result, they are very receptive to your help, either with offerings or advice, to improve their sales and marketing performance.
VSBs are also challenged, in this full-employment economy, to find good employees — 21% rate this very challenging. While this may reflect some holiday-related seasonality, hiring is an ongoing challenge for VSBs — and is a great opportunity for you to provide hiring advice, if it is relevant to your brand.
Small Businesses: Help Wanted
Hiring is an even bigger challenge for SMBs with 20 to 99 employees — 48% rate it very challenging. Making it easy to recruit skilled workers is a huge opportunity for job sites; providing advice on the hiring process is a great opportunity for any company in the HR space.
The second-biggest challenge SBs face is also HR-related: employee retention. With the unemployment rate in the mid-three-percent range, SBs’ key employees are being actively recruited. The upshot: a bull market for employee benefits providers and for anyone who can provide SB principals with tips and advice to keep their employees from being recruited away.
The third-biggest challenge for SBs is “keeping our data secure.” This is an obvious focus for tech companies, but every vendor (that means you) should be messaging about how they keep customer data and/or funds secure.
Mid-sized Businesses: Changes at the Top
For MBs — SMBs with 100 to 500 employees — the top business challenge for the past eighteen months has been data security. This month, a new focus emerged: innovation. 50% of MBs rated “developing new products and services” very challenging. This might reflect optimism about business growth prospects (and MBs are generally optimistic; 73% expect to grow YOY by double or triple-digits), although it might also reflect a desire to find new business opportunities to replace slowing revenue streams. (Their third-biggest challenge is “dealing with competition.”) Either way, if you target larger SMBs, they will be very receptive to your offerings and/or advice on developing new offerings or entering new markets.
MBs are not immune to HR issues; Their second-biggest challenge is finding good employees. (49% rate this very challenging.)
In our November Pulse, we added two new business challenges for SMBs to rate: “Coping with economic and political uncertainty” and “coping with climate change.” While neither of these issues rated especially high among VSBs or SBs, they are top of mind for MBs: 46% rated “uncertainty” and 44% rated “climate change” very challenging. Both issues are as — or more — pressing to MBs than, for example, finding new customers, managing costs, keeping current on technology or retaining current customers. Providing advice on how your larger SMB customers can navigate changing economic, political and climate risks can enhance your position as a trusted advisor.
Business Challenges by Industry
We roll Pulse respondents up into four broad industry groups: Professional Services, Retail/Wholesale, Manufacturing and Other (which is mostly personal services). Even at this very high level, the differences between industry challenges are striking. For example, Professional Services firms are most challenged by “finding new customers” (36%), followed by “keeping current on technology” (23%) and “access to capital” and “coping with economic/political uncertainty” (tied at 21%). Retail/Wholesale businesses are also most challenged by new customer acquisition (43%), but their next biggest concerns are “dealing with competition” (30%) and “managing costs” (27%). Manufacturing businesses have a different set of challenges: “finding good employees” (33%), “retaining good employees” (29%) and “managing costs” (28%). The more you can tailor your messaging to the concerns of specific industries — which is how SMBs self-identify — the more your messaging will resonate.
Want to learn more? Get the full list of SMB business challenges by company size, respondent age, industry group, growth outlook and more.