Small Biz Will Be Big Biz in 2023

By Bob DeMarzo

Small business is going to be big business in 2023. With the consistent drumbeat of news of economic slowdowns, inflation and layoffs hitting corporate America, delivered by the business and mainstream media, technology suppliers of all shapes and sizes are rediscovering the long tail of the market — small businesses. There is plenty of evidence that the major players in the IT space are shifting their focus— that means dollars and resources — to address solutions that fit small business from a pricing and consumption standpoint.

Dave Seibert, founder of SMB TechFest, who has been at the center of the SMB market as a Microsoft partner and CIO, said he is seeing an uptick in technology providers and vendors that are rediscovering the small business channel. In recent months, Seibert said he has been approached by numerous suppliers, especially those in cybersecurity, who want to sharpen their focus on solutions for small business and better serve partners who have those relationships. He is predicting a strong market for channel partners who sell into the SMB sector, especially the “S” in SMB, which is typically a company that has 100 or fewer employees or seats. He also expects greater demand-generation efforts from private-equity investments in SMB vendor stack solutions to positively impact the market. 

Industry researchers, including Gartner, paint an optimistic picture of the small business market, with year-over-year growth expected to be 6.7% this year and 6.2% in 2023. Keep in mind IT spending in small, midsize and SOHO (small office home office) could top $1.32 trillion in 2022, with the biggest spending sector residing in North America, totaling more than $500 billion by many estimates. Researcher Analysys Mason, which is forecasting strong growth in SMB IT spending through 2025, believes a large portion of that spending will be through MSPs and systems integrators. 

A consensus from Channel Futures Partner Boards, which include a wide range of technology advisors, agents, MSPs and channel partners, confirmed that many technology suppliers and vendors are turning their attention to the SMB market as demand cools in the enterprise. But board members said many channel partners will need to sharpen their focus on the needs of SMB because of their focus on enterprise or midmarket. Board members agreed that with the right mix of demand generation and marketing strategies, partners should be able to grow sales in the SMB segment. Board members agreed that traditional agent-type partners will face the greatest challenge pivoting to the small business customer segment vs. their MSP counterparts. 

“The bottom line is it should be a banner year not just next year, but the next couple of years. COVID accelerated this digital transformation, but the work MSPs did was a Band-Aid. You must now complete the digital transformation for your customers,” said Len DiCostanzo, CEO of MSP Toolkit. “You must make this permanent for the law firms, accounting firms and other customers. Make SMBs as agile as a corporate enterprise,” the leading consultant to partners and vendors added. 

The universal advice is not to strip out key features from a service or product offered to enterprise customers. Small and midsize businesses need full-featured SaaS and other solutions.

“Make sure your products are similar in strength in what you sell to the enterprise, and couple that with great enablement so you don’t have to strip down the product,” DiCostanzo said.