What’s a Small and Medium-Sized Business (SMB)?
Here are three steps to rethinking small and medium-sized businesses as speed-maximizing businesses.
Caylin White, Editorial Lead
Starting a small and medium-sized business (SMB) involves planning, making key financial decisions, and understanding what it takes to succeed. The good news is, that you have the potential to make a big impact if you can learn what it takes to be successful as an SMB.
These tips will help you realize that small businesses make big bucks. But first, let’s be sure to define SMBs and why they are so important to our economy.
Here's what you’ll learn:
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What are small and medium-sized businesses?
A business with 1-20 employees is defined as small, while businesses with 21-100 employees are considered medium-sized.
That’s the standard definition for SMB, of course. The term SMB, which stands for “small and medium-sized business,” is a useful one for analysts and researchers tasked with defining the difference between the IT needs of large enterprises and the challenges faced by smaller companies.
The second attribute used to define an SMB is annual revenue: small business is usually defined as organizations with less than $50 million in annual revenue ; midsize enterprise is defined as organizations that make more than $50 million, but less than $1 billion in annual revenue.
SMBs collectively have the power to shift entire industries, define new requirements for enterprise software, and essentially change the way all of us work.
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Why are SMBs so important?
MBAs and economists will tell you that their power comes from the fact that the economy can only support a limited number of large enterprises, creating a long-tail market for SMBs. That market consists of many small and medium-sized businesses that (in aggregate) carry almost as much market power as the bigger players.
Large enterprises have room for fluff — they swell and slow down if they aren’t careful. SMBs don’t have that luxury, and as a result, they are built for speed. The only way to thrive as a fast-paced organization is to fill your team with people with heart, and then feed their passion for what you do. Which makes the customer their number one priority.
In fact, 65% of customers expect companies to adapt to their changing needs and preferences. But 61% of customers say most companies treat them as a number. As a small or medium-sized business, you have the ability to treat every customer as an individual.
State of Connected Customer, Salesforce
What are the benefits of an SMB?
The global economy relies on small and medium-sized businesses for job creation, economic growth, and innovation. Governments are now recognizing the importance of small and mid-size businesses and are allocating resources and programs to support them.
Small and medium enterprises play a large role in driving competition in both local and global markets. They benefit local economies by creating employment opportunities, generating tax revenue, and contributing to the success of other businesses. Additionally, these businesses make significant contributions to global exports and distribution.
What are the challenges for smaller organizations?
Small and medium businesses do have challenges that can hinder growth and success. One major challenge is keeping up with the increasing preference for digital interactions among customers. Failure to have the right tools for the job can leave these businesses lagging.
Cybersecurity poses a growing threat to small and medium businesses as well. SMBs are particularly vulnerable to ransomware attacks due to inadequate antivirus software. Upgrading to a robust security solution designed for enterprises can safeguard their data, applications, and devices.
Expanding into new markets is another hurdle for SMBs. Limited resources often prevent them from performing thorough market research, making it difficult to make informed decisions. Additionally, disruptions in supply chains can disproportionately impact mid-size businesses, as larger companies have more leverage in negotiations.
SMB = Speed-Maximizing Businesses
B2B brands hoping to sell into the bustling SMB market can shift their understanding of the term to a new acronym that fits their unique profile better. SMBs are not just small and medium-sized businesses — they are speed-maximizing businesses.
Under this new acronym, anyone hoping to land the business of an SMB needs to understand three core tenets of the way they work.
1. SMBs have a need for speed. They need to move quickly, and can’t stomach your request for a six-month deployment. They want you to move fast or get out of the way. If you don’t, they’ll drop you — fast.
2. Motivations vary for SMBs. If they wanted to be pencil-pushers or cogs in a wheel, SMB personnel would have joined large enterprises. Consider what motivates your prospects before you make introductions. When you do, you’ll spark more interesting and highly motivated conversations.
3. Different SMBs are different. Shocking, right? But you’d be surprised by how many sales representatives try to run the same play against vastly different companies. Each SMB is unique, so take the time to learn about your prospect’s business before making sale-stalling assumptions.
How do you help your SMB grow?
To foster growth, SMBs should focus on investing in capabilities that support growth including improving business automation and administrative tasks. By leveraging artificial intelligence (AI)-powered technology and collaboration tools, they can drive growth by streamlining operations, reducing costs, and increasing efficiency.
Cloud-based solutions that integrate people, finance, and payroll functions enable SMBs to access real-time data and analysis, which all help informed decision-making.
Here's how Salesforce can help your SMB grow:
- Customer relationship management (CRM): Centralizes customer information for better management and interaction.
Tracks customer interactions and sales pipeline for a clear view of the business. - Sales forecasting: Provides accurate sales forecasts to help plan for future growth.
Allows for data-driven decision making with real-time analytics. - Marketing automation: Automates marketing tasks such as email campaigns and social media posting.
Helps nurture leads and convert them into customers more efficiently. - Customer service: Offers a platform for managing customer service requests and issues.
Enables quicker resolution of customer problems, improving customer satisfaction. - AppExchange: Provides access to thousands of apps that can extend Salesforce functionality.
Allows for customization to meet the unique needs of each business. - Mobile access: Allows access to Salesforce data and functionality on-the-go.
Enables real-time updates and better collaboration among team members. - Integration capabilities: Integrates with other tools and platforms used by the business. Streamlines processes and reduces manual data entry.
- Scalability:Grows with the business, accommodating more users and data as needed. Ensures that technology doesn't hinder growth and expansion.
- AI and automation (Einstein): Provides AI-driven insights and predictions to improve sales and marketing efforts.
Automates routine tasks to increase productivity. - Trailhead learning platform: Offers free online learning resources to help users get the most out of Salesforce.
Encourages continuous learning and skill development.
As small businesses transition into mid-size companies, employee engagement platforms can play a crucial role in enhancing employee satisfaction and retention, contributing to overall growth.
SMBs may be small, but they have big heart and can make a huge impact. With the right tools, people, and strategy, they can help our economy as a whole.
What is an SMB? FAQs
Small and medium-sized business (SMB) is an acronym that is widely used to categorize companies based on their size, typically measured by factors such as annual revenue, number of employees, or assets, rather than operating at a large, enterprise scale.
SMBs are generally characterized by a smaller number of employees, lower annual revenues compared to large corporations, and often a more localized or niche market focus. They tend to have simpler organizational structures and more agile decision-making processes.
The SMB market is important for the economy because small organizations are significant drivers of job creation, innovation, and economic growth. They contribute substantially to the gross domestic product (GDP) and foster local community development.
Technology needs for SMBs often prioritize affordability, ease of implementation, and scalability, typically favoring cloud-based solutions and integrated platforms. Large enterprises, conversely, may require more complex, customized, and on-premise solutions with extensive IT infrastructure.
SMBs frequently face challenges such as limited capital, intense competition, difficulties in attracting and retaining talent, and navigating regulatory complexities. They also often struggle with scaling operations and adopting advanced technologies.
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