We are small business owners from the Baby Boomer Generation. We aren’t as young as we used to be. The oldest among us is about 71, the youngest is about 51. We’ve worked hard running our businesses while raising a family, accumulating things and if we were successful, making money.
So now what?
One of my favorite expressions I hear from small business owners is, “That doesn’t fit my business model.” I have sometimes followed up when hearing that and asking simply, “What is your business model?” Usually, I am told a lot of “stuff” about demand, processes, partners and things that really aren’t overwhelmingly important. In other words, a lot of stuff that adds little value to the small business owner. Most often because somewhere, somehow, someone has made this all very complicated.
Your business model should be simple. It should be a quick snapshot of what your business is and how it operates. Like the overused metaphor of layers of the onion, the model can be as multi-layered as you want. Layer upon layer of stuff that has value to some and to others is gobbledygook.
Ensuring you have a steady supply of future new customers is a critical component of any business. How you do that is called Marketing. Tools involved in marketing are things like advertising, networking, etc. Understand Marketing is the strategy, the tools are the means of executing your strategy. Understanding the difference between them is critical.
I often hear my clients talk about marketing. In almost 100% of the time they are talking about advertising efforts. “I market in the newspaper, I market on the radio, etc. What they really mean is they advertise. When I ask them if they knew if their efforts were successful in getting new customers none could say anything definitively, yet all assumed it was working.
What is Small Business in America? By some definition it is companies of less than 100 employees. By others it is less than 500 employees. Some include home based businesses, some do not. For simplicity we will focus on companies of less than 100 employees and exclude home based business.
There are 8.1 Million Small Businesses in America today. They employ over half of all private sector workers and almost 40% of those in High Tech jobs (approximately 130 million workers). They provide between 60% and 80% of all net new jobs annually. They produce more than half of all nonfarm private gross domestic profit in the US (roughly $6 Trillion). Small Business is important.
Pretty impressive stuff. They also account for over 52% of all retail sales, over 46% of all wholesale sales and almost 25% of all manufacturing sales. The average annual gross revenue of a small business is $3.6M. Small Business is profitable.
Many people confuse marketing and advertising, even those who perform these tasks for businesses. It is important that as a business owner you understand the difference. Both of these activities can help your business, however, using them interchangeably could harm your business.
Let’s define the two first:
Advertising – this is a paid promotion of your business, its products and services. It gives potential consumers an idea of what you do and where. This can happen in many different venues. For example, television, direct mail, radio, ads in newspapers or magazines. All advertising is good. However it may not be good for your specific business.
Marketing – marketing is designed to reduce the cost of sales. It is charged with bringing your business a specific number of new customers on a consistent and sustained basis.
Now right now you may be saying “what is the difference?” It is a fair question.