It is no surprise that database firms are focusing on helping customers market to small businesses, since they constitute the vast majority of all U.S. companies.
The Small Business Administration defines a small business as one having fewer than 500 employees. This represents more than 99 percent of all employers. With about 23.7 million businesses nationwide in 2003, the small business market is attractive to mailers, yet daunting.
The number of small businesses prompted data provider Experian to conduct a study recently of 1 million owners of firms with fewer than 500 employees. Though results have not been released, an executive at the firm shared some preliminary findings.
“Many small businesses are consumer-owned, and therefore it's no surprise that small businesses act a lot like consumers,” said Denise Hopkins, business-to-business marketing director at Experian Business Information Solutions, Costa Mesa, CA.
Another finding was that the average household income of a small business owner is 21 percent higher than the national average. Hopkins said those findings should be reason enough for consumer marketers to look at the small business market.
Experian relaunched its National Business Database of 16 million U.S. businesses last month with added features to help minimize risk associated with marketing to small businesses. The company incorporated its Commercial Intelliscore and new Market Intelliscore products, which predict the likelihood of a business going 90 days beyond payment term, into the database.
According to an October report by business database compiler infoUSA, the number of U.S. businesses overall grew 17.4 percent between 1998 and 2003 despite a decline in 2003 after five consecutive years of growth.
“When the economy goes bad small businesses get hit first, but then when times improve they are the ones who improve along with it,” said Vinod Gupta, president/CEO of infoUSA, Omaha, NE.
The infoUSA study named Nevada, Delaware and Florida as the top three states by percentage growth, at 48 percent, 29.5 percent and 29.5 percent, respectively, from 1998 to 2003. The three states with the highest number of new businesses were California with 279,053, Florida with 183,475 and Texas with 162,699.
Gupta predicted that growth numbers for 2004 would be flat, but encouraged marketers to look at the small business market.
“Small businesses tend to get overlooked because everyone is mesmerized by the Microsofts of the world, but what they forget is the biggest growth is coming from small business and they are the key driver of the economy,” he said.
InfoUSA maintains a database of 14 million U.S. businesses as well as a database of new businesses that is updated weekly. On Sept. 1, the firm relaunched Sales Genie, its Web-based subscription prospecting tool, with small businesses in mind. The tool lets businesses access unlimited sales leads from infoUSA's 12 databases online for a flat $250 monthly fee.
“We did a study of small businesses a couple of years ago and asked them what their biggest headaches were, and 90 percent said their biggest challenge was finding new clients and growing their businesses,” Gupta said. “We developed Sales Genie as a tool for small businesses limited by budget and looking for new customers.”
The Direct Marketing Association is also getting into the act with last month's announcement by president/CEO John A. Greco Jr. that the association would launch a small business council. The council is in the planning stage and likely will launch in mid-2005, DMA spokesman Louis Mastria said.
“From a philosophical point of view, it is going to be about helping small businesses grow,” Mastria said. “So whether you are a one-person operation or 20 or 200, if you consider your operation to be a small business and you need help taking that next step or managing costs in the postal arena or the online arena, that's where we would come in.”