How MSPs Can Cash in on the Microbusiness Opportunity
As a descriptive term, “SMB” covers a lot of territory. Roughly speaking, small-to-mid-sized businesses are those with 1,000 or fewer employees, although that number is not set in stone. Regardless of exactly how a company is defined as an SMB, MSPs in this market tend to focus their efforts on companies that have at least a few dozen employees. But this leaves out a potentially lucrative SMB niche: the “microbusinesses” with 1-10 employees.
Microbusinesses may not garner a lot of attention from the wider business community, but they are actually doing quite well for themselves, thank you very much. A new survey of more than 1,900 U.S. microbusinesses from VistaPrint shows this SMB segment is generating new customers and revenue, and this growth will continue in 2012.
Survey results indicate 79 percent of microbusinesses increased their customer count in 2011, with 71 percent reporting resulting increased revenues. In terms of growth, 29 percent acquired more than 30 new customers, and in terms of revenue 28 percent boosted revenue by 11 to 19 percent.
Optimism for the Future
Microbusinesses cited customer growth as the most important goal when asked about plans for 2012. According to this year’s survey, respondents said that the most effective marketing channel in driving revenue and customers in 2011 was word-of-mouth, garnering 54 percent of responses, with social media ranking second at 13 percent.
Looking ahead to 2012, microbusinesses said that the two channels they will rely on to increase their customer base will be referrals and direct mail. Both got 25 percent of responses, followed by website traffic at 16 percent.
A Macro-Opportunity for MSPs
These figures indicate that a strong opportunity exists for MSPs willing to scale down their services to meet the unique needs of the microbusiness market. The typical microbusiness cannot afford any significant investment in staff or IT infrastructure to support activities such as social media, website traffic management, or even more traditional activities such as direct mail. In addition, social media is increasingly becoming a primary means of spreading word of mouth and obtaining referrals, meaning MSPs could potentially convert much more than 13 percent of microbusinesses to managed social media services.
Naturally, MSPs will need to be creative to maximize their profits from the microbusiness customer segment. A shared services model, particularly one based on a cloud platform, is one method for MSPs to achieve savings and leverage best practices on the back end, which can then result in lower costs for cash-strapped microbusinesses.
The microbusiness segment is probably not lucrative enough to support any but the smallest of MSPs on its own, but is lucrative enough to investigate as a source of additional revenue. Plus many of today’s most successful companies, especially in the IT sector, got their start as microbusinesses. Imagine having been an MSP who established a managed services relationship with a Microsoft, Google or Yahoo back in their “garage days.”