Building a Business Model For SMB Needs

Vendors and solution providers have been trying to crack the challenging SMB market for a long time. The potential in this space comes from the old “make it up in volume” theory. These businesses obviously don’t have the spending power of huge corporations, but their sheer numbers make for an appealing target. According to the Office of Advocacy of the U.S. Small Business Administration, SMBs represent 99.7 percent of the 6 million U.S. employer firms, have generated 63 percent of net new jobs over the past 15 years and create 33 percent of export value.

CompTIA’s latest research study, “Enabling SMBs with Technology,” finds an interesting tension emerging in the SMB space. Just like their larger counterparts, smaller firms now look at technology as a strategic driver for business objectives. However, they’re still much more likely to feel cost pressure, making new investments a challenge. Cost reductions top the list of business objectives for SMBs, with 58 percent citing that as a priority.

Still, there is potential to introduce technology as the best path toward meeting other goals. Take the No. 2 business objective as an example. More than half, 55 percent, of SMBs say reaching new customers is a priority, and most of these customers will expect to do business in a digital or mobile environment. This is true for B2B and B2C. Yet SMBs don’t always shine in Web presence, so it’s an uphill battle to capture the attention of new customers.

To achieve these goals, many SMBs will look for outside help to get the right level of expertise and to allow their staff members to focus on their core competencies. The most common way that SMBs engage with solutions providers right now is for repair or troubleshooting, but there is evidence that they are looking for more innovative solutions and for partners flexible enough to provide those solutions.

The trick is finding a model that works based on what an SMB is willing to pay and the revenue a channel firm needs to be viable.

Solving that problem begins early in the process, as companies work to evaluate options for purchase and determine return on investment. SMBs could name several improvements they’d make in the purchase process, and bringing these ideas to the table is a good start for proving value as a partner.

An Effective Business Transformation Strategy

When considering how to address the SMB space, it’s important to remember that the new model might not need to be drastically different from the current model. Over the past decade, there has been a significant push toward managed services, yet many channel firms still find success in traditional reselling and break/fix work. Even if certain models are better candidates for growth, the channel of the future will likely include a wide variety of models, with some that are just emerging today.

These models can then be combined in many different ways depending on the specific needs of a small business. In some cases, companies will be more comfortable working with multiple partners. In other cases, SMBs will still want a single point of contact, creating new opportunities for subcontracting and partnering to deliver complete solutions.

Channel firms looking for more success in the SMB space should first consider their existing solutions, figuring out how those solutions address broad business goals instead of simple operational needs. From there, they should consider how their offerings fit in an overall technology strategy, which can then lead to portfolio expansion, business transformation or new partnering relationships. The SMB market may be a challenging puzzle, but the desire for innovative technology will drive innovating solutions.

Seth Robinson is senior director of technology analysis for CompTIA.