Micro Business is the New Category

In my last blog, I wrote about a new category for small business called Micro Business.  Categorization isn’t just a problem in numbers and names, the issue is in target market. This is not an easy thing to change, there is one aspect of target market that has been ingrained in us for tens of thousands of years. When our predecessors went out to hunt, they did not go after the smallest of the herd, they targeted as big as they could handle.

I’m not an anthropologist, so I don’t really know what humans or pre-humans did ten thousand years ago, but I do know what my brothers-in-law did this past summer.  I have a few brothers-in-law, but I want to talk about two.  I will call them Big Bil and Little Bil, as in Brother-In-Law.

We all go to the same lake, Big Bil and Little Bil can’t get enough fishing. I’ll be in the shade soaking in a good business book like Traction or the Referral Engine, meanwhile Big Bil and Little Bil will be fishing.  But there is a difference between Big Bil and Little Bil.

Big Bil has a boat and he goes after the big fish, Rainbow trout who like the deep cold water. Little Bil has no boat; he fishes from the dock, or the shore, or a kayak. This summer Big Bil caught 2 Rainbow trout, and Little Bil caught more than 50 Kokanee salmon.

It isn’t a big leap to know that in most cases in business to business marketing, we all try to land the biggest client we can handle, or even bigger. And why wouldn’t we? It is much easier to bill $10,000 at the end of the month to one client, then $1000 to ten clients. It’s easier to collect, it’s easier to manage the relationship, and there is likely more profit margin.  The issue is that as service providers take on bigger and bigger clients, they marginalize their smaller clients.

Let’s say your business service-provider has 10 clients, and they consume on average around $500 a month in business services, and you are 1 of the 10; you use about $100 a month in services, but customer service is fine.  Now your service provider goes and signs two big clients, one that brings in $2500 and one that brings in $5000 a month, their biggest client ever. Now their average monthly service invoice is $1000, which was their highest revenue generating client before, and you are still at $100 a month.

What do think is going to happen to the service you get? It is going to going slide, hard and fast. What also changes are the solutions your service provider offers; instead of focusing on solutions for the $500 average, now they focus on solutions for the $1000 average. And you, you either pay up and shut up, and/ or the relationship deteriorates. And now there is a gap between what you can afford and the services that your need.

I can speak from experience. In my last business, we had a couple of big clients, some medium size clients, and a whole bunch of little ones. Then we signed our biggest client ever, and that changed everything. Eventually we fired 30 micro clients, because we couldn’t service them, or more accurately didn’t want to service them.

It didn’t feel right then, and it doesn’t feel awesome to this day.  But we spun it. “We aren’t focused on your needs, and so we are going to push you away so you can find the love you are looking for.  It’s not you, it’s us.”

But wait, remind me again, what percent of companies have 10 people or less?  Seventy.  Five.  You could catch 2 fish this summer, or 50.  Can you guess which fishermen goes unsatisfied most of the time?

Micro is the new small! Micro business is the new category.

Want to learn more about how we enable micro businesses?

Create your own free form with HubSpot