by Janet Muto

In my last blog post, I talked about very small businesses (under 50 employees).

In this post, we’ll look at the businesses who are ‘on the grow’ – the larger of the smaller, so to speak.

When my children were in middle school, a wonderful head of school gave the parents a lecture on the “middle school child”.  Her key message was that while middle schoolers range in actual age from 12 – 14, their real range (based on social, emotional and physical characteristics) is actually more like 9 to 16 – posing unique challenges for the people who teach (and parent) them!  SMBs in the 50 –400 range are like middle schoolers – some handle their growth and size like mini enterprises – while others are just very small businesses with more employees – so while my observations fit the “average,” the distribution is wide.  

On the Grow (50 – 99)

This segment is at the cross-roads of the small to medium business world.  While the actual numbers are not exact, it is clear that somewhere in the 50 –75 employee range, businesses have to start to de-centralize decision making and begin to move an implementation/execution-only focus to one of process improvement.  I have often seen that this group stumbles into “management” by necessity – functions begin to have layered management teams, new hires need to be trained and don’t just learn by osmosis (early employees hear everything that is going on).  Managers may have never managed before, as businesses are still looking for functional expertise vs. management skills.  All this makes this group a “perfect storm” for solutions that help them organize and run their businesses more efficiently.  There are nearly 500,000 U.S. businesses in this group with close to 20 million employees.

Moving Up (75 – 150)

As I noted in the “Growing up” segment, the lines between that group and the “Middies” are blurry.  Somewhere in the range from 50 to 150 employees, businesses make a big leap.  There’s lots of pain in the transition, but that translates to opportunity for savvy businesses.  Business infrastructure needs to be in place for businesses to scale to 100 employees.  Some businesses may recognize this earlier and others later, but by 100 employees it’s time!  Decision making processes are in place, roles and responsibilities identified, and investments are made with longer term gains in mind.  For businesses selling to this group, there is a need to walk the line between the fast, easy and streamlined approach needed for the smaller businesses and the more complex, customized solutions required by larger businesses.  There is more money available, but the sales process will take longer, require more “proof” points and more effort, but will result in bigger deals.

Mini Enterprise (150 – 400)

By the time most businesses have reached 150 or 200 employees, they are beginning to look and act like their larger counterparts.  Certainly they may not be as decentralized, and may not have offices and management all over the world, but they do have decentralized management teams, multiple offices and senior executives who have to look at long term strategy and growth, and whose management teams have day-to-day functional responsibility.  If you are already selling to enterprise customers and looking to go down-market, this group can be a logical extension of your current business model.  Channels and distribution will be a critical element of your down-market plan, but often the vocabulary and value proposition of your products and services will be similar to their larger counterparts.  This group has been the newest target (even more recent than the rush to the “S”) of many businesses (listen for medium sized business in ads) as it can offer a larger market area, with less infrastructure change for enterprise focused businesses.

Marketing and selling to these mid-sized businesses can be a challenge. To boil it down to one insight: don’t judge (ergo market and sell to) a mid-sized company based on number of employees alone.  Understand that who they act like is more telling than how many people they employ.

– Janet
@janetmuto