When it comes to new investments in technology, we usually hear about expenditures made by large enterprises. But high-tech solutions are changing the way small- and medium-sized businesses (SMBs) are doing business, too. Advanced technology now available to SMBs is making it possible for the smaller-scale enterprise to service customers and control costs more effectively. This provides ample opportunity for office tech resellers and service providers to expand business offerings and their customer base.
There are more than 6 million SMBs in the United States, and another 24 million sole proprietorships. The top four verticals in this space are healthcare, construction, professional services and retail. SMBs account for 32.9% of the United States’ $1.3 trillion in total exports. This is a huge market for technology, and in fact, tech spending by smaller enterprises topped $602 billion in 2018, an almost 5% increase over the previous year.
Who is the SMB and what motivates their tech purchases?
Surveys have shown that most small and medium-sized companies (about 42%) wait until technology is proven before investing in new tech, while about one-third of SMBs can be considered early adopters who see technology as crucial to their business, and only about 25% could be considered late adopters in tech investments.
Another survey showed younger entrepreneurs — millennials — buy tech for data security, while Gen-X and Baby Boomers are motivated by improved business performance and improved functionality, respectively. These purchase intentions reflect the needs of all SMBs in the current business environment as they seek to improve their functionality, security, and process performance, and to lower costs.
Printers and copiers remain popular
The devices that most smaller businesses are buying, as one might suspect, include computers and laptops, with 36% of SMBs focusing their tech spending on core hardware infrastructure of this sort. Cell phones are a close second. However, printers and copiers remain popular items, even in an increasingly paper-free world. About 24% of small and medium businesses anticipate purchasing this type of tech in 2019. When they do buy printers or copiers, they tend to buy them very quickly — 32% of SMBs that buy printers do so within one week, a rate similar to cellphones. The need to print is still viewed as important in the modern world.
Software and the cloud
The software of greatest interest to SMBs consists mainly of email, security solutions, accounting software and payments processors. More than half of smaller enterprises already have these technologies in place or are planning to implement them within the next year. Most of the applications will be hosted locally, as many smaller enterprises seem not to fully trust or embrace the concept of software as a service.
About 30% of SMBs are spending on industry-specific technologies. These are things like electronic medical records in doctors’ offices, or accounting and tax preparation software for firms that offer those services. Another 30% report spending on both basic infrastructure and industry-specific solutions.
Cloud-based software is gaining in popularity, however. It has numerous advantages for smaller enterprises, most prominently the “anytime/anywhere” level of access. Cost savings, security and disaster recovery are also priorities, however. Firms of different sizes seem to have different priorities. Mid-size firms with 100-500 employees, for instance, are most eager for security solutions. For smaller businesses, cost is the priority.
The absolute top priority for most SMBs is market share. Almost half report adding customers as being their top priority in terms of purchasing new technology, and another 40% say retaining existing customers is. In the highly competitive world of smaller enterprises, keeping existing customers and adding more is paramount.
What SMBs want from tech vendors is also fairly straightforward. They want clear, competitive pricing with no hidden fees and experts who can tell them everything they need to know. A reseller or service provider that understands the customer’s industry, and offers proven solutions at competitive, easy to understand pricing will have an advantage.
SMB execs are tech-hungry
It should be clear, at this point, that technology is an absolute priority for smaller firms. A CompTIA study shows 64% of SMBs recognize technology as a factor in pursuing their business objectives, and more than 35% of SMBs make hiring tech-savvy employees a priority. Tech is vital to all their operations — implementing new processes, retaining and expanding markets and innovating new product lines.
Many SMB executives are hungry for more tech. About 40% believe that their current level of tech investment is too low. And even those who are satisfied with their current spending levels still have “wish lists” of items they would happily purchase if the budget allowed.
What to do
An office technology reseller or service provider should consider the following in developing business with SMBs:
- Understand the customer’s business goals (are they market share growth, data security, process improvement, cost reduction, etc.?) and apply the appropriate technology to achieve those goals.
- Know the customer’s industry and be able to discuss solutions in that context rather than in a general context.
- Understand how print, software and cloud services can work together to provide a fully integrated solution for the SMB.
- Have case studies or references available and to share.
- Price competitively and clearly to represent your expertise value.
The market for SMB tech is huge and growing. As we have seen, technology has become indispensable to the life of the modern small- or medium-sized enterprise. It has reshaped the market environment as well as the internal processes of the SMB, and become a major factor in competition among smaller firms. Technology isn’t just for the big players — it’s here, it’s local, and it sells.