While there are millions of small business owners across the United States, most of them can generally fit into one of "four distinct types," according to a new survey by sales and marketing software maker Infusionsoft. The company's 2014 Small Business Market Survey also sheds light on how each type manages business challenges while attracting customers and growing sales.
"Most of the research published about small business owners offers demographics like revenue and company size, or the owner's age or gender," said Susan Baier, founder and president of Audience Audit Inc., which conducted the survey. "For this research, Infusionsoft wanted to understand the underlying and often very different attitudes that drove these owners to entrepreneurship in the first place and those affecting their experience now. This type of research is far less common but provides a wealth of fascinating information."
The survey showed significant differences between each group, including the contrast between the "Passionate Creators" group, who are the most active and data-focused marketers, and the "Legacy Builders" group, who are investing the least in their sales and marketing initiatives.
"This research demonstrates that, while small business owners share many common challenges, they are driven by diverse motivations to start their companies and have very different goals and expectations," said Clate Mask, Co-Founder & CEO Infusionsoft. "We don't think they can be truly understood by looking only at their demographics. We set out to study what differentiates and unites them at a deeper level by looking into their behaviors, challenges and mindset. What we learned is compelling and will help guide future developments for Infusionsoft. We do more than offer a great software product – we are committed to understanding the small business owner's world on every level."
The four profiles of small business owners include:
These small business owners started their business because they want the ability to control their fate, decisions, work environment, schedule and revenue. They value where they devote their time and believe owning a small business allows them the freedom to live the lifestyle they've always wanted.
They are more likely than the other segments to cite as important goals 'living the life I want', 'being in control', 'reducing the amount of time I have to work' and 'having flexibility in my schedule to spend time with my family'. With 'time to get everything done' being their biggest challenge, they are more likely to use email marketing automation, bookkeeping software, ecommerce and CRM systems to help them manage their time. Most likely of all the profiles to use project management and membership site management software tools. 81 percent work at home – the most of any category -- and they are the least likely to say they'll ever go back to a traditional job.
This group started their small business because they love what they do. Running their business gives them a sense of accomplishment and pride. They value the impact they are able to make for their customers and the world at large. Small business owners within the Passionate Creators profile are also the most likely of the four profiles to mentor other entrepreneurs and speak to audiences about small business.
48 percent stated they always knew they would run their own business. They believe passion is one of the most important qualities for small business success and are motivated to serve a target customer well. They showed the most longevity and success, ranking as the most likely to have been in business more than 10 years and the most likely to have revenue over $100,000, a sizeable group reporting revenue of over $1 million last year. They were also the most optimistic, with 71 percent expecting company revenue to be 'somewhat' or 'much' higher than last year. They demonstrated the most marketing sophistication, with the highest rates of marketing spending and involvement in digital marketing, social media, email lists and content marketing. They are the most likely to track financial performance vs. budget, and 70 percent use analytics to support decision-making – the highest level of any segment.
This profile resonates the cold, hard reality that sometimes running a small business is more risky than rewarding. The fear expressed within this group is rooted in the very real challenges small businesses face every day. This group has significant concerns, misgivings and skepticism about the value of owning a small business.
Many believe that traditional jobs are more secure, and feel that corporate careers garner more respect than small business ownership. 51 percent are solopreneurs, the highest of any category. They are least likely to report achieving many of the benefits associated with owning your own business – from financial security to time with family and friends. They are the most likely to have considered closing their business at 53 percent and the most pessimistic about their five year outlook.
Small business owners who fall into this profile see small business ownership as a practical economic choice. They believe small businesses are more ethical than larger corporations and believe most people would start their own business if they could. They started their business to bring something new to the marketplace – something no one else offers. They take tremendous pride in the business they've created and plan to run it for the long haul.
Business ownership provides them with a sense of stability for their future and the future of their family. They are the least likely of the four profiles to have a website, and even those that do have a site are least likely to use email, content marketing, SEO or marketing automation to generate leads. They are more likely to rely on family and friends for guidance. They are most likely to run only one business and the least likely to have considered closing or selling their business.