The new mentality of small business owners

June 2nd, 2015 by Sarah Buckle

Reading Time: 3 minutes

We know that small businesses are now growing again: the number of VAT registered small businesses is now growing again at about 3% a year.

We estimate that there are now about 1.1 million VAT registered small businesses with up to nine employees whose businesses are currently growing.

But it is not back to “business as usual”.

The recession has been an education for small business owners. An education they will not forget.

Rainmakers’ own original research shows that the experience of the recession has seriously impacted the way that small business owners now think and operate.

They learned:

The experiences of pre-recession business owners

We estimate that there are about 715,000 VAT-registered up to nine employee growth businesses which are still in business now, which started up before the recession and have managed to adapt and survive their way through it.

In the heady years of the early-mid 2000s, markets were expanding, consumers were spending, businesses were investing, Banks were lending freely and all you had to do as a small business owner was ride the wave of demand..

Now, that world has gone entirely.

The experiences of lower demand, lack of credit, unpredictable revenue streams, as well as strong competition on pricing, made the ownership of a small business during 2008 – 2013 an endurance test.

Pre-Recession Business owners have had to adapt to survive – re-engineer their business model, diversify their business base, cut their costs, and take the hit.

These business owners have emerged as much tougher operators. They are self-sufficient, resilient, tough negotiators, savvy in business finances and loyal to their staff.

The experiences of the recession-born business owners

There are about 350,000 VAT-registered up to 9 employee growth businesses which started up since 2008 and are still here. (2)

Businesses born since 2008 have emerged in a world without credit, where they have had to stand on their own two feet. They are very focussed on their customers – they see customer demand as the most important thing they have to concentrate on to build their revenues and their business success. They tend to be more marketing -sophisticated than the pre-recession owners, they look to follow where their customers lead. They flex and adapt to keep their valued customers.

They are very cautious with money – they will only invest when the customer opportunity presents itself. They have a preference for outsourcing, for keeping their options as flexible as possible. They prefer “pay and adapt as you go”.

They are learning business finances on the job, but they are ready to invest a step at a time to grow their business for the future.

So what does this new small business mentality mean for b2b marketers?

  1. Small business owners want flexibility. They do not want to be nailed down to long term inflexible product/service arrangements. They prefer to pay as you go
  2. They want to act immediately. They manage their resources so they can respond instantly to their customers’ demands. They will expect you to react instantly to them too
  3. They have been beaten up on costs by their customers. They are cautious managers of their finances and won’t spend it if they haven’t got it. Realistic pricing is essential with this audience
  4. They are very loyal to suppliers who have stood by them in difficult times. They value relationship
  5. They are cautious investors. They need proof before they trust. They want transparency before they commit
  6. They expect, as customers, to be at the centre. They have spent the past few years focussed on their customer base. They are intolerant of suppliers who do not focus on them too

B2B marketers need to market to the new small business mentality to succeed:

Small business owners with growing businesses are more demanding than ever before. The opportunity is there to win a share of their growing expenditures as their businesses grow.

If you want to know more about their different growth strategies, how they use technology, what they think of their suppliers, then do get in touch and learn more about our free report.

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