`Small Business Is Big Business'
Who the heck is Randy Rosler? Recently, AT&T sent a stretch limo to Rosler's tiny Manhattan greeting-card company, flew him to Boston, put him up in a luxury hotel, and treated him to a Red Sox game. "I bonded with their top honchos," he says. Rosler is an entrepreneur, and along with millions of other small-business owners, he has become the object of intense desire by some of America's biggest marketers.
Companies that made their names catering to other behemoths or to consumers are now falling all over each other to reach a new wave of entrepreneurs. "A few years ago, you never saw anything targeted to small business," says Roger Jask, a vice-president of the U.S. Chamber of Commerce. "Now, it's like everybody woke up all at once and said, `Hey. There's a big market here. Let's go get it."'
Next Tuesday, American Express Co. will announce a new small-business corporate credit card with a $20,000 limit--the centerpiece of a sweeping push into businesses with fewer than 100 employees that will also include new credit options, lease financing, and financial management services. Pitney Bowes Inc. plans to roll out smaller, cheaper postage meters for companies small enough to fit inside the corporate mailrooms where the manufacturer made its name. Ernst & Young is padding out its powerful corporate roster with tiny companies that can tap into the firm's expertise with a new online consulting service.
Why all the fuss over companies that could take a year to earn what mammoth customers spend in a day? "The answer is simple," says Steve Alesio, president of American Express Small Business Services. "Small business is the third-largest economy in the world, after the U.S. and Japan." The sector has never grown as fast and furiously as it has in recent years. The number of companies with fewer than 100 employees has increased nearly 50% since the early 1980s, according to the SBA. And from 1990 to 1994, they created most of the new jobs. Now, those 20 million tiny enterprises account for about half the nation's employment and more than a third of gross domestic product.
Many of these new enterprises were started by downsized execs armed with big severance checks and used to the latest technology. "Old-line entrepreneurs were notorious for hanging on to their money," says Jask. "The new line are bringing in a lot of new equipment and spending on technology like crazy." Robin Sternbergh, head mf IBM's worldwide small and midsize sales and service, says the company's fastest-growing segment is companies with fewer than 50 employees, where sales are increasing at 14% a year. To compete with bigger companies, these tiny operations are snapping up equipment that lets them network with customers and suppliers. "Small business is big business," she says. "And we're putting a bigger emphasis on it than ever."
SPREAD THE WORD. To reach this promised land, marketers have to reinvent the way they do business. Salespeople can't knock on 10 million doors the way they called on the top few hundred big companies. Pitney Bowes is restructuring its 3,000-strong sales force, in part to reach the roughly 3 million small businesses it believes need postage meters. Instead of visiting each prospect, it will rely more on advertising and direct mail and for the first time will market its new minimeters through retailers.
Others are cultivating relationships with entrepreneurs, hoping they'll spread the word as they network. AT&T created small regional councils to help pinpoint what small-business owners want--and develop good word of mouth. "I pass their name around at all the functions," says Randy Rosler, whose Boston junket rewarded his work in a local council.
Now that marketers have discovered small business, the next step is to segment it the way they do consumers. "Eight years ago, nothing was targeted to small businesses and all you had to do to get their attention was say, `Small Businesses, we have something for you,"' says Phillip Buehler, a senior vice-president at Wunderman Cato Johnson, the direct-marketing arm of Young & Rubicam. American Express captured about 1.6 million customers that way, but further growth requires more focused products and services. After all, the goal now is to supply something exciting enough to create some buzz at the Rotary Club--not just the boardroom.