Sir Richard Branson once famously said, “A big business starts small.” The most legendary ventures started from small beginnings. And companies in early stages today will grow to be the behemoths of tomorrow. The best time to earn their loyalty and business is now.
Some brands opt to exclusively target large enterprise businesses, assuming that ROI and deal-size will be worth significantly more than SMB deals. However, as the Ehrenberg-Bass Institute recently revealed, 95% of B2B buyers are not in market for your products, given the infrequency of companies (particularly large ones) changing service providers (e.g., banking, legal advice, software or telecoms). SMBs have more rapid growth rates, shorter sales cycles and flatter hierarchies for purchasing decisions. Ignoring the SMB segment can mean foregoing a valuable, high-growth audience that is actively in market for your solution.
To understand the current state and evolution of small- to medium-sized businesses, we compiled insights from first-party data, third-party research and a global survey of 2,985 global LinkedIn members in May 2021. (Note that LinkedIn defines SMBs as companies with 1-200 employees).
One of the most fascinating “comeback journeys” over the past year has been that of small businesses. Vulnerable to economic uncertainty of the pandemic in 2020, they were disproportionately impacted. According to eMarketer, two-thirds of global SMBs experienced either flat or declining annual revenue since February 2020. And, perhaps unsurprisingly, we saw a 58% decrease in net-new SMB Company Page creation on LinkedIn in 2020.
However, they adapted, pivoted priorities, and found new ways to move forward. More net-new SMB company pages were created on LinkedIn in Q1 (January to March 2021) than in any other Q1 ever, indicating strong recovery.
To determine which SMB segments are driving this resurgence, we analyzed the data and discovered three key cohorts underpinning that growth:
- Solopreneurs (Companies on LinkedIn that are owned and operated by 1 person)
- Retailers (SMBs that self-identify as part of the Retail & Consumer Products Industry group on LinkedIn)
- Startups (SMBs in LinkedIn’s Fastest-Growing Company Segment, defined by employee growth in 2021)
What’s important to this growing SMB audience? We surveyed LinkedIn members on their SMB business goals for 2021. Their top priorities are developing products, hiring and retaining employees, and establishing category ownership.
But they face headwinds in achieving them. According to Salesforce’s 2020 Small and Medium Business Trends report, the top obstacles for SMBs are:
- Maintaining revenue growth
- Hiring and retaining employees
- Meeting customer experience expectations (such as bringing innovative offerings to market and personalizing customer engagement).
Note that some of their top priorities are the very same as their most daunting challenges.
SMBs are actively in market for solutions to these hurdles. In the next 12 months, roughly one in five SMB leaders plan to purchase email marketing software, customer service software, project or task collaboration tools, or e-commerce software.
But what’s important to them when evaluating vendors? Salesforce’s report confirms it’s “ease-of-use, price, and trustworthiness.” They’re looking for technology that is agile, flexible, seamlessly integrates, delivers high value for its price and is reliable.
And they’re turning to LinkedIn to inform those purchasing decisions. More than 94 million global SMB professionals are LinkedIn members. And monthly global SMB engagement on LinkedIn (defined by clicks, comments, or shares) has grown 24%+ since April 2020. What’s more, one of three SMB employees on LinkedIn are Senior Decision-Makers (Director-level or above), which is 3X the comparative rate of enterprise organizations on LinkedIn.
Global SMB employees are seasoned professionals as more than 67% have more than 8 years of experience. And small-business owners are power users on LinkedIn. Compared to the benchmarked average member, they have 2x more connections, and share content 2.5x as often; they’re far more likely to join industry groups AND double as likely to be active in them. They follow more companies and view company pages more often, potentially for competitor analysis.
And it’s not just small-business owners who are highly engaged on LinkedIn: Overall, SMB employees leverage LinkedIn to help them succeed and grow in their roles. According to the Global Web Index in Q1 FY21, 16% more SMB employees on LinkedIn cited “being successful” as a factor that is important to them vs. SMB employees on Pinterest, Facebook, Instagram and Twitter.
Consider which industries are booming in the wake of the pandemic. Globally, companies specializing in Professional Services, Retail, Technology and Engineering represent nearly two out of three SMBs created since March 2020.
Meanwhile, the largest proportion of Solopreneurs (SMB companies on LinkedIn with 1 employee created after May 2021) work in the Corporate Services Industry, which is growing 48% year-over-year. Examples of Corporate Services include accounting, executive assistants, recruiting and staffing and professional training. If we look at the sharpest uptick since June 2020, the Media & Communications industry grew the most in number of new Solopreneurs (+54%). Examples of Media and Communications include advertising, publishing and market research.
The Retail segment also demonstrated resilience through innovation, as there has been a renaissance of net-new Company Pages created in the industry. Since June 2020, the industry group that saw the highest growth rate in number of Retail SMBs was Consumer Services (+54%). Examples of Consumer Services include salons, dry cleaners and pest removal among others.
The third group underpinning the seismic SMB growth are companies included in the Fastest Growing Company Segment (defined by growth rate of # employees in 2021). We refer to these as Startups. Twenty-four percent of all worldwide SMBs are included in this segment, and one-third of Startups bring in $100M USD or more annually. The largest proportion of these high-growth Startups are in Corporate Services, Software and Manufacturing. The Media and Communications industry saw the largest growth in number of net-new Startups created in the past 12 months (+49%).
Small businesses have experienced enormous growth rates in number of employees and revenue, which means today’s small businesses will be tomorrow’s enterprise organizations. Securing the leadership team’s product loyalty today will save you from losing to competitors as they grow over time. What’s the best way to reach them? Leverage precise targeting informed by these insights. Speak directly to your audience, infusing all your content with a trusted tone that highlights your understanding of SMB priorities: flexibility, value and ease of use.
All of these key statistics and insights are summarized in the infographic below:
For more SMB insights, subscribe to the LinkedIn Marketing Solutions blog.
Related articles