24 Feb

Over 70% of the Largest Small Businesses Have a Website

Over 70% of the largest small businesses have a websiteWhen 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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  1. Luz Spielberg said on February 25th, 2009 at 2:14 am

    The data you presented is really interesting especially how businesses evolved to be web oriented. And also about this — Over the next few years that will change as Yellow Pages books completely disappear and being online is like breathing air. — this is really possible!

    Reply
  2. Amanda said on February 25th, 2009 at 10:25 am

    Interesting information. I’m wondering if their sales volumes has anything to do with the fact that they have a website. As the percentage of businesses with websites decreases, so do the sales volumes. Makes me go hmmm…

    Reply
  3. Luz Spielberg said on February 26th, 2009 at 3:40 am

    Hi Amanda,

    I believe that has something to do with the industry these businesses belong to.

    Luz

    Reply
  4. Martin Lindeskog said on February 26th, 2009 at 7:24 am

    Luz,

    I don’t think that the yellow pages and other paper directories will disappear in the near future. If you want to find a plumber in the quickest way, the directory is handy dandy. If you search online, you could end up with all kind of results that you have to go through. The online directories are pretty common here in Sweden, e.g. hitta.se (“find”).

    I think it is a good idea for almost every company to have a site online, but the question is what kind of site. Nowadays you could set up a free site by using e.g. Netvibes. It is positive to see that creators and designers of websites have a big market to take “attack”.

    Reply
  5. Karen said on February 26th, 2009 at 12:58 pm

    That’s a huge percentage. In addition to having a website, one thing that can help small business owners is using services such as teleconferencing and video conferencing from companies like http://www.24conference.com because it can cut a large portion of your commuting and travel expenses

    Reply
  6. Luz Spielberg said on February 27th, 2009 at 5:03 am

    Hi Martin, Thanks and I understand your point but still I believe it’s still possible. :)

    -Luz

    Reply
  7. Arthur Bland said on March 1st, 2009 at 11:59 pm

    I love your insight no. 3 – Segment, segment and segment! Without it, you could have spend time, money and effort in building a website with no purpose at all.

    Reply
  8. Rose Anderson said on March 3rd, 2009 at 3:25 am

    I agree Arthur! One must have a clear purpose to achieve so the business will take the right direction too.

    Reply
  9. Scott Fitzgerald said on March 5th, 2009 at 11:21 am

    What are some other useful ways to segment SMBs other than size and revenue?

    Reply
  10. Anita Campbell said on March 5th, 2009 at 1:58 pm

    Hi Scott,

    There are lots of ways to segment SMBs, depending on the product or service you are trying to reach them with – here are some of them:

    – number of employees (don’t forget contractors)

    – number of users for your product or service (Employees and users are not the same. Think laptops for a manufacturing company: they probably won’t need laptops for every worker on the line, but perhaps all the back office staff are potential laptop users)

    – according to industry or line of business (Example: marketing companies and Internet entrepreneurs may have a keener desire for the latest Web-related services, even if they are just one or two or three people in the company — whereas a landscaping company with 50 employees may not place the same value on Web services)

    – according to level of knowledge and sophistication, especially for cutting edge products

    – geography (especially for local-market businesses)

    – revenue size

    – need for a product or service

    – age of the business (Startups often have different needs from established businesses)

    – DIY-ers vs those who use help from professionals

    – penchant the decision-makers to spend time online or participate in social sites

    – related behaviors and activities (Example: do they perform a multitude of transactions online, or just email?)

    Hope this helps,

    Anita

    Reply
  11. Rose Anderson said on March 6th, 2009 at 2:58 am

    Anita, that is extensive. It’s a good business lesson to take note of. Thanks!

    Reply
  12. Scott Fitzgerald said on March 6th, 2009 at 10:31 am

    Thanks for the list. With SMBs making up 99% of all businesses, it’s hard to say you target SMBs. One would say who don’t you target? Most research out there uses the traditional size and revenue breakdowns, or industry, but there’s got to be a better way. There’s always a better way! Do you know of any research out there with segmentation other than the traditional ones?

    Reply
  13. TJ McCue said on March 6th, 2009 at 7:42 pm

    Anita, I was so amazed and surprised at these statistics. Less than 50% of small businesses have a website? I’m floored. I believe you, of course, but I’m stunned. I guess there are ventures out there that don’t depend on having an online presence, but I’m having a hard time thinking of what they might be… Enlighten me. Please.
    Thanks.

    Reply
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