What is an SMB? Small to Medium-Sized Business Definition, Examples, and What Sales Needs to Know

What is an SMB? Small to Medium-Sized Business Definition, Examples, and What Sales Needs to Know

SMB (or small to medium-sized businesses) refers to a wide range of businesses, including B2B and B2C organizations. And more often than not, they’re punching far above their weight.

If you’re selling to small and midsize businesses, you need to understand how they think, what they need, and which pieces of this large sector of businesses you need to pay attention to.

So what are SMBs, and how does understanding the needs of small and medium-sized businesses help your sales team succeed?

What is an SMB (Small to Mid-Sized Business): Definition

An SMB (small to medium-sized business) is generally defined by the number of employees and the business’s annual revenue. Most people define SMBs as companies with fewer than 1000 employees, and less than $1 billion in annual revenue.

The world of SMB is a unique, wonderful place, but it also comes with its own challenges. While large enterprises may worry more about overall market share and profits, small businesses worry more about making sure they’re staying under-budget with their purchases, saving time, and avoiding risks that might damage their business.

Examples of SMBs

An SMB company can be in any industry, and most of the businesses we interact with daily are SMBs—in fact, small businesses account for 99% of all firms in the US.

In B2C, a small to medium-sized business might include a local shop or restaurant, an Etsy shop, or a service-based business in your area. Larger businesses (aka enterprise companies) include companies like Amazon, Apple, or Starbucks.

In B2B, examples of small to medium businesses include startups like Close, as opposed to larger companies like Salesforce or SAP. B2B examples of SMB businesses also include freelancers and small agencies that provide support and services to other businesses.


The Benefits & Challenges of SMB for Sales Teams

Whether you’re a large company or small business, selling to SMBs has quite a few benefits, especially for sales teams. Here are a few advantages of selling to small and mid-sized businesses:

  • Shorter sales cycles: SMBs have fewer people involved in making decisions, meaning they can work faster than larger companies. Selling to SMBs means your sales cycles will be shorter, increasing the number of closed deals.
  • Easier to access decision-makers: It’s a lot easier to cut through the red tape in an SMB. The smaller the business, the easier it is to find and contact the people at the top who will be involved in purchasing your products.
  • Build ongoing relationships: Building relationships and long-term partnerships with small businesses is much easier than with larger companies as the owners and employees tend to be less busy and may stay longer in the same role.
  • Easier to qualify leads: Large enterprises have many moving parts, making it hard to tell if they’re a good fit for your solution. SMB companies tend to be more straightforward and are interested in saving themselves time, meaning you’ll be able to qualify faster.

There are also some clear challenges unique to SMB sales, including:

  • Higher risk aversion: Considering only 50% of small businesses survive more than five years, most SMBs are highly risk averse and unwilling to take chances regarding their business. From a sales perspective, this makes overcoming objections crucial.
  • Smaller deals: With smaller budgets and fewer team members, SMB deals are smaller than enterprise deals, so you’ll need to close more deals to drive profits.

What is the Difference Between SMB and Enterprise?

Here are the main differences between SMBs and enterprise companies:

Number of Employees

Gartner defines small businesses as companies with fewer than 100 employees, and midsize businesses as companies with fewer than 1000 employees. Larger enterprises tend to have 1000+ employees.

Annual Revenue

An SMB sees an annual revenue at less than $1 billion, while enterprises could earn annual revenue much higher than that.

Buying Process

The buying process for SMBs is often shorter and more straightforward. Fewer people are involved in every deal, and there is less red tape to cut through to get approvals. That said, small businesses are cautious about spending money, so they need to know that what they’re purchasing is worthwhile and can provide value to their business as a whole.

For enterprise companies, a sales cycle of up to 18 months is considered normal. This is because enterprise deals are complex, and involve a lot of decision-makers and stakeholders.

Pain Points

In very broad terms, all customer pain points fit into one of these four main categories:

SMB pain points chart finances productivity processes support

In SMB, pain points can differ from enterprise sales. For example, productivity may be a larger piece of the puzzle for SMBs—since they have fewer employees, they need to find more creative ways to save time.

Also, support needs look very different for SMBs. Smaller businesses may rely on your sales team and their expertise to help guide them through aspects of their business that are less familiar, such as setting up technology or navigating hosting solutions.

Sales Process and Strategies

The way you sell to an SMB will differ greatly from the way you sell to an enterprise company. With large companies, spend more time on account mapping, contacting different people within the organization, or supporting large implementation projects.

With small and medium-sized enterprises, your process focuses more on qualification and discovery, as well as offering self-service options whenever possible.

5 Tips To Improve Your SMB Sales Process

Ready to build (or improve) your sales process for small businesses? Here are six key aspects you’ll want to keep in mind.

1. Pay Close Attention to Lead Qualification in SMB

SMBs don’t have a lot of time. One study found that 19% of SMB owners work more than 60 hours a week, and a whopping 89% regularly work on weekends.

To get on their good side, make sure not to waste any of the precious minutes they have to do their job. How do you do this? By qualifying as much as possible before setting up a meeting to ensure they’re a good fit for your offering.

For inbound leads, this might mean setting up a few qualifying questions in your online forms. For outbound leads, you may spend more time researching or using B2B data providers to make sure the business fits your ideal customer profile.

Save time for your SMB prospects, and they’ll thank you for it.

2. Take Time to Build A Relationship

Even though the sales process is shorter, it doesn't mean your relationship with the customer will be. In fact, when you work well and align with your SMB customers, they’ll likely stick around for longer.

So, build that relationship. Take time to get to know them and continue providing value to them past the sale. Show you’re a productive partner to their business, not just another service provider. This will build loyalty to reduce churn and earn better customer reviews.

3. Educate and Advise Your Prospects

While SMB owners are fully immersed in their industry, there may be aspects of their business that they struggle with. That’s where you can help.

For example, a local shop owner might struggle to market their business effectively. They are looking to purchase a marketing software you sell, but they really need advice on the whole marketing process.

A good sales rep knows not to jump in with deep marketing jargon or simply push the sale through quickly. The best salespeople are experts in their field, and can act as consultants to their prospects. By helping navigate challenging areas of their business, you’ll provide real value throughout the sales process (and set your customers up for success).

4. Reduce the Perception of Risk

Reducing friction is crucial in SMB. Especially since SMBs are more risk-averse, offering commitment-free ways to experience your product and be absolutely sure before they purchase is important.

This might include offers like:

  • Free trials
  • Personalized product demos
  • Money-back guarantee
  • Monthly payments for yearly contracts

Reducing risk will show SMB that you’re there for them–and help you close more deals.

5. Leverage Relevant Social Proof To Show You Understand The Issues They Face

Including testimonials from big brands might show you’ve got what it takes to help big companies. While that might be impressive to some customers, it may be a turn-off for a small business.

When they see the Google logo on your site under “current customers,” they don’t think “Oh wow, that’s cool!” They think, “If Google is a customer, then we probably can’t afford this product or service.”

Instead, use relevant social proof that underlines how well you serve other SMB customers. Show how customers in their industry are succeeding with your product in specific ways, and prove you know how to solve the issues they face on a daily basis.

Is SMB Sales Right for Your Businesses?

I always like to say: there’s no point in catching a whale if it’ll sink your boat.

In other words, focusing on enterprise deals can be tempting, because they generate more revenue. But you’ll end up failing if you don’t have the resources and infrastructure to support large customers.

To decide which type of sales is best for you, first identify which type of customer you can serve properly. If you have the right background and resources to serve SMB, then that’s the place you’ll want to start.

Of course, one important resource you’ll need is a CRM that helps you optimize communication with your prospects and customers. Try Close CRM today to see how we can help you close more SMB deals.