Sizing Up Small Business

May 12, 2011 by Heather McIlvaine

Size matters: SMEs need business solutions that fit their budget (photo: SAP)

Size matters: SMEs require business solutions that fit their budget (photo: SAP)

If you’re reading this article and you work in the European Union, chances are you’re employed by a small or medium enterprise. How do we know? According to the European Commission, SMEs provide 67% of all jobs in the EU. Of the 23 million businesses in the EU, 99% are SMEs. The United States is home to 27 million small and medium-sized companies. And in India, these businesses account for 45% of industrial output.

In other words, small and medium enterprises may have mini payrolls, but their global economic impact is huge – and still growing. ABI Research predicts that there will be 330 million SMEs in the world by 2014.

It’s no wonder the technology news sites are keeping a close eye on the SME market. The IT news portal, V3.co.uk, recently published an article on some tweaks SAP has made to its SME solutions. In an interview with V3.co.uk, John Antunes, SAP’s SME director for the UK, said SAP is giving SME customers more customization options. For example, the Business ByDesign 2.6 release in January 2011 now provides a software development kit for partners to create add-ons and extensions.

Even so, many SMEs are still under the impression that SAP is just for major corporations. Increased PR and advertising around SAP contracts with small business will be integral to changing the market’s mindset, said Antunes.

And PC World seems to agree with that strategy. The tech news site recently published a list of key topics SAP should address at the upcoming SAPPHIRE NOW event in Orlando, among them: Business ByDesign customer stories that demonstrate the solution’s stability and benefit for SMEs.

This raises the question: what are the special business needs of SMEs and what are the up-and-coming trends in the SME market? On the next page, we take a look at two growing trends.

This graphic shows the breakdown of mobile spending by small business in the US in 2010 (source: SMB Group)

This graphic shows the breakdown of mobile spending by small business in the US in 2010 (source: SMB Group)

Internet is the great equalizer

As more people go to the web to inform themselves, do their shopping, share their opinions, and interact with businesses, SMEs will increasingly find themselves on a level playing field with large enterprises. “Everyone from big brands to small businesses to individuals has the opportunity to influence those [online] decisions,” writes Colleen Jones in her book Clout: The Art and Science of Influential Web Content.

Many small businesses, however, still don’t even have a website. To compete with large enterprises, SMEs must make their online presence a priority. We told you about the e-commerce add-on for SMEs in our article “Open for Business: All-in-One Webshop,” but already a new trend is gaining momentum in the area of online transactions: mobile commerce.

The idea of mobile commerce is twofold: first, you allow customers to make purchases from a smartphone using mobile payment technology, and second, you optimize your website for mobile browsers and conduct mobile marketing campaigns and loyalty programs. Mobile commerce is not yet widespread, but it has the potential to replace traditional e-commerce as more and more people around the world acquire smartphones. Read this article from SmallBusinessComputing.com to find out more about how mobile commerce will affect SMEs in particular.

Integrated social media

Social media is already used by many businesses as a way to communicate new products and messaging to customers. In a survey conducted by American Express OPEN Small Business Monitor in April 2011, 58% of small businesses that approach growth “aggressively” use online social networking to market to customers. And by now many businesses have also integrated social media into their online webshops, allowing them to accurately suggest items a customer might like. Some companies offer gift certificates to encourage customers to mention them on Facebook or Twitter. See our “Selling with Twitter” article for more information in this area.

But social media is not a one-way street. Customers are just as likely to share their negative opinion of your company or product on Facebook or Twitter as they are to publish a rave review. A 2010 article in The Harvard Business Review stated the importance of customer service for businesses today: “To compete in this aggressively interactive environment, companies must shift their focus from driving transactions to maximizing customer lifetime value.”

Businesses that implement social media in their customer service departments will be able to resolve customer issues more quickly. And businesses that work to engage customers in a continuous dialog – even when there is no issue – will reap the benefits of word-of-mouth marketing via social networking.

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