FOCUS. PEOPLE. COMPETENCY

Buying Behavior of Micro Business

DISTREE 2011Matt Rowland-Jones

Nine out of ten companies in Europe have something very obvious in common.

What is it?

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● What is a Micro Business?

● Why should we be interested?

● What are Micro Business trends?

● How do they buy technology solutions?

Agenda

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Everyone talks about growing the business, but what you don’t hear enough about is the importance of not growing the business too fast.

Chris Wink, Founder Blue Man Group

Attitudes to Growth

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● Micro Business = a small business with fewer than five employees and less than $35,000 in start up costs

● Non Employer Business = no paid employees apart from the owner

What is a Micro Business?

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For EU Statistics

‘SME’ = 1 to 250 employeesSplit into …

‘Medium’ = up to 250 employees‘Small’ = up to 50 employees‘Micro’ = up to 10 employees

For EU Statistics

‘SME’ = 1 to 250 employeesSplit into …

‘Medium’ = up to 250 employees‘Small’ = up to 50 employees‘Micro’ = up to 10 employees

If smaller businesses are to have an impact on the European economy they need to grow bigger, expand their markets and their turnover.

Francoise Le Bail, EU SME Envoy

Attitudes to Growth

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Mix of Business by Count

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Eurostat 2009

Count of numbers of enterprises in millions

All SizesSME

Up to 250Medium

Up to 250Small

Up to 50Micro

Up to 10More than

250

All EU 20.1 99.8% 1.1% 6.9% 91.8% 0.2%

France 2.3 99.8% 1.0% 6.5% 92.3% 0.2%

Germany 1.8 99.5% 2.3% 14.1% 83.1% 0.5%

UK 1.6 99.6% 1.7% 10.5% 87.5% 0.4%

Italy 3.8 99.9% 0.5% 4.8% 94.6% 0.1%

Spain 2.6 99.9% 0.8% 6.8% 92.2% 0.1%

Poland 1.4 99.8% 1.0% 2.9% 95.9% 0.2%

Mix of Business by Employees

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Eurostat 2009

Count of numbers of employees in millions

All SizesSME

Up to 250Medium

Up to 250Small

Up to 50Micro

Up to 10More than

250

All EU 129.8 67.4% 17.0% 20.7% 29.7% 32.6%

France 14.7 61.7% 16.2% 20.8% 24.7% 38.3%

Germany 21.5 60.5% 19.3% 21.8% 19.3% 39.5%

UK 17.7 54.8% 15.4% 17.9% 21.5% 45.2%

Italy 15.2 81.0% 12.5% 21.6% 46.9% 19.0%

Spain 13.9 78.0% 14.8% 25.5% 37.7% 22.0%

Poland 7.5 69.8% 18.7% 12.0% 39.2% 30.2%

Mix of Business by Value

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Eurostat 2009

Gross Value Added in millions of Euro per year *

All SizesSME

Up to 250Medium

Up to 250Small

Up to 50Micro

Up to 10More than

250

All EU 5650 57.7% 17.8% 18.9% 21.0% 42.3%

France 795 55.2% 21.0% 18.7% 15.6% 44.8%

Germany 1152 17.7%

UK 1072 50.7% 16.6% 15.5% 18.5% 49.3%

Italy 631 71.7% 16.1% 23.0% 32.7% 28.3%

Spain 536 67.9% 17.3% 24.1% 26.5% 32.1%

Poland 122 48.4% 20.1% 11.5% 16.8% 51.6%

* GVA = a bit like GDP

● More than 90% of all business in Europe have ten employees or less

● Around 30% of all employed people in Europe work for a company with ten or

less employees

● 42m people

● Approximately 20% of all value added is generated by companies with ten or less employees

● Italy around 60 SME per 1000 inhabitants, DE and UK around 20

In Summary

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● What is a Micro Business?

● Why should we be interested?

● What are Micro Business trends?

● How do they buy technology solutions?

Agenda

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Growing the Business

FOCUS. PEOPLE. COMPETENCY

YesNo

Do you want to expand your businessto more than ten employees?

74%

26%

“Whilst they are in business to make money to earn a living, for most of them, money beyond a decent living is not their number one priority,as it seems to be with larger businesses.”

Micro Business Perspectives “Over Ten Employees, Not for Me” 2010

Trends

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Micro businesses are better structured to endure difficult times,

due to lean operating style and creative business models.

More small businesses start during economic downturns because people

look for extra income.

There is high adoption of social networking tools amongst

micro businesses.

The evidence suggests that there is a shift away from large firms and towards small business, particularly in the southern regions and in high

technology industries.

Smallbiztrends, “Five Key Micro Business Trends”, 2009

● Micro businesses use professional networks to create business opportunity.

● Micro business owners are more likely to run blogs and to use on line networking tools.

● There is higher penetration of tools like Facebook and YouTube for business use in Micro, than in larger companies.

● A Micro business is just as likely to have a blog as a website.

On Line and New Media

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On Line and New Media

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• 45% of small businesses have their own website 1

• 40% have a blog in their field of expertise 2

• 75% have a company page on a social networking site 3

• 60% use social media for identifying and attracting new customers 3

• 60% have built a network through a site like LinkedIn 3

• 45% expect social media to be profitable in the next twelve months 3

1 = WebVisible and Nielsen Online Survey, 2010.2 = Network Solutions and University of Maryland, 20102 = FedEx Office Signs of the Times Small Business Survey, 2010

When Micro Business Grows …

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Owners worry less about the economy and its impact on

their business.

Productivity and efficiency decline. Smaller companies generate more

revenue per employee.

More importance is placed on having a company website.

Business owners start to be concerned about expanding the business.

Guardian Life Small Business Research, 2010

Case Study

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Susan. Coconut Consulting. Carbon reduction specialist for mid-sized companies. Two owner-employees. One year in business.

Susan. Coconut Consulting. Carbon reduction specialist for mid-sized companies. Two owner-employees. One year in business.

Question AnswerWhere did you source technology for your business? How did you choose the brand?

Talked to colleagues and associations for advice on brand. Bought through on line reseller.

What factors were most important in choosing the brand? Price? Support?

Price was a big factor. Wanted a known brand, but fit for purpose more important.

What is a good example of how you purchased a technology solution for your business?

Purchased Sage software for accounting based on the recommendation of the bank.

Have you been marketed to by technology vendors, directly or through resellers?

No, not at all. Every decision has been based on personal research and networking.

Are you buying services as well as hardware and software? What sort of services?

Yes. The telephony solution is provided as a managed service charged by the month.

If your business expands, do you expect to change the way you buy technology?

Yes. More solutions and services will be sourced through ‘business channels’ in the future.

How big will your company grow before this change in behaviour takes place?

“When I no longer have the time to manage technology myself I will look for help.”

Case Study

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Andy. Bowan Arrow. Marketing consultant for technology resellers. One owner-employee. One year in business.

Andy. Bowan Arrow. Marketing consultant for technology resellers. One owner-employee. One year in business.

Question AnswerWhere did you source technology for your business? How did you choose the brand?

The small business specialist arm of a large retail chain. Opted for HP hardware.

What factors were most important in choosing the brand? Price? Support?

Consulted network of contacts and looked for a brand “for business” not consumer.

What is a good example of how you purchased a technology solution for your business?

Outsourced telephony as a managed service. Recommended by a colleague.

Have you been marketed to by technology vendors, directly or through resellers?

Very little marketing from technology vendors apart from some direct mail.

Are you buying services as well as hardware and software? What sort of services?

Phone, yes, but nothing else. Might look at this if the business grows.

If your business expands, do you expect to change the way you buy technology?

Not sure he wants the business to grow. More hassle and more responsibility.

How big will your company grow before this change in behaviour takes place?

“Perhaps if I need to recruit employees at some point in the future”

Summary

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“A

Mark

et

that M

atte

rs?”

●Represent 90% of all businesses, 30% of all employees and (possibly) 20% of all spend.

●Generally want to stay small, though one quarter want to grow.

●Tend to thrive in hard economic times.

●Are good at networking and use new media to develop business contacts.

Summary

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“C

on

su

mer o

r

B

usin

ess?”

●Listen to colleagues and professional advisors when they choose technology.

●Select based on price and (to an extent) brand, like a consumer, but …

●Start buying through ‘business channels’ even when still very small.

●Will readily look at managed services and software-as-a-service models.

Sage Software

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