I have worked in small companies, big ones, corporations, startups and family businesses. The differences are not only in size, they are utterly dissimilar. What you can achieve in these organizations and how you achieve it, can vary radically. It takes years of experience to be able to work effectively in environments so different.
Just to be clear I’ll make a silly example. If you drink coffee in a startup you just get out and go to Starbucks for a couple of hours, in a family business you have a real grinding coffee machine, in a small business you have those rented coffee machine and it’s all paid by the company, in a big one you have those aseptic vending machines where every option tastes the same. If drinking coffee can be so dissimilar imagine the rest.
Thus said I want to focus on small companies, including family businesses, and their relation with marketing/advertising, because SMALL is the new BIG.
Innovation and creativity is happening mostly in smaller environments, this is a trend happening all over the world. SMEs, or Small Medium Enterprises, have become critical constituents of every country economy. But what is small? How you define it?
I personally like the EU definition which takes into account the number of employees and the annual turnover, as you can see from Table 1 taken from ANNUAL REPORT ON EUROPEAN SMEs (downloadable here in pdf):
And I find particularly interesting Table 2:
Two things come up immediately:
- 92% of SME are made by MICRO enterprises or by companies with less than 10 employees and 2 million € turnover
- 66.5% of all European jobs are represented by SME and they generate 57.6% of the gross value added by the private (non-financial) sector
In the United States, according to the Census Bureau, the impact of SMEs is not as staggering but still relevant:
- Firms with fewer than 100 workers employ 34.9 percent of private sector payrolls
- Small firms accounted for 65 percent (or 9.8 million) of the 15 million net new jobs created between 1993 and 2009. Much of the job growth is from fast-growing high-impact firms, which represent about 5–6 percent of all firms and are on average 25 years old. [According to the SBA’s Office of Advocacy]
The United States was hit harder than the European Union by the 2008 crisis. By 2010, the number of SMEs in the US was still trending downward. In terms of employment, SMEs in the US performed rather poorly compared to those in the European Union. Nonetheless, American SMEs are on a course to recovery at a faster pace than their European counterparts.
I know. Numbers are boring, but revealing as well. In a nutshell companies with a couple of employees, making less than a couple of millions a year, are driving the economy both in terms of GDP and employment.
These companies you probably never heard of, are usually market leaders in niche sectors, where is too expensive for big corporations to compete. They sell small quantities/services to a very select clientele. They are extremely well regarded and professional. They don’t really do any marketing as they rely on word of mouth. Many of them don’t even have a website.
They are usually driven by an enlightened entrepreneur working 24/7 on his company. Sooner or later these little gems will need to:
- Reach an adequate size to avoid being dependent on one product/service
- Retrieve enough capital and expertise to fund expansion
- Develop a branding/marketing mindset and eventually a strategy
Growth of scope is like an insurance policy for sudden technological changes or unforeseen events. Investment capital, either internal or external, is essential for development. Marketing/branding is the pick-lock to fully exploit the new road-map and reap higher benefits.
While for these companies it can be easy, once they decide, to fulfill the first two, it’s incredibly hard to find marketing professionals willing to lend their expertise for some obscure company sitting somewhere outside the city. And if they did find them, they wouldn’t be able to pay them.
They should go to an Advertising/Branding agency, but there aren’t agencies ready to deal with companies like this. Why? I tell you why:
- They are hard to identify and unlikely to come forward.
- They have no marketing culture (they probably despise it) and you usually have to deal with the founder
- More than simple advertising, they need a long term branding strategy
Most common agencies are ill-equipped to deal with this scenario, they prefer big clients that speak the same language and send big hefty checks at the end, but let’s recall the numbers for a second. In the EU micro companies (less than 10 employees and less than 2M€ turnover) have a huge impact on the economy and no-one, except Google AdWords, is doing anything with them.
I have been thinking about it and I believe there is a huge potential for a new breed of advertising agencies specialized in SMEs and Startups, that both share the reputation of being “difficult” and not worth the effort.
A new entity focused on Micro and Small Enterprises could help these tiny but feisty businesses thrive and prosper, bringing them to an all new level.
In my view the “SMALL IS BIG” agency should have the following traits:
- Be focused more on branding than advertising
- Possess a strong engineering and managerial background
- Deliver a long-term strategic and international vision
- Mix seasoned Managers with young professional
- Have a minority stake in every company it deals with
If you build it, they will come.