December 19, 2014

Beware of Small Business Averages

beware of averagesWhen you lump together numbers and come up with averages, you can get a pretty skewed picture of things.

What’s more, averages can lead you to the wrong conclusion.  They can cause you to take the wrong actions.  Sometimes they are just not very helpful.

A case in point is the numbers you often read answering the question: “how many small businesses have websites?”  Typical responses say: 50% of small businesses have websites.  Or more recently, 44% have websites.

However, those are averages.  What an average does NOT tell you is how much variation there is among small businesses.

You see, among the largest small businesses, a full 73% have a website, according to one survey.  It’s only when you look at the smaller end of the small business market that you see numbers in the 50%-or-under range.

Over at Selling to Small Businesses, I wrote about a set of research results from Barlow Research that broke down the figures about how many small businesses have websites, according to size of business based on annual revenues.  Here is what their research showed:

Percent of businesses that have a website, by annual sales size:

45% – Revenues of $100,000 to $499,000
49% – Revenues of $500,000 to $999,000
69% – Revenues of $1.0 Million to $2.49 Million
67% – Revenues of $2.5 Million to $4.9 Million
73% – Revenues of $5.0 Million to $10 Million

And what about midsize businesses? For businesses with revenues of $10 Million to $500 Million in size, 84% have websites.

Read the whole thing, especially if you sell to the small business market. It just may clarify how you to approach your marketing.

15 Comments ▼

Anita Campbell - CEO


Anita Campbell Anita Campbell is the Founder and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses, and also serves as CEO of TweakYourBiz.com.

15 Reactions

  1. Great reminders Anita, as usual, not to miss the forest for the trees. Numbers can be misleading if you don’t consider the entire picture. Thanks for giving clarity on a topic that is often misrepresented — the savvy and sophistication of small biz owners.

    I’ve always seen numbers that a small business was anything under $100 Million. Is that a government number? I like yours better. I’m going to head over to Selling to Small Businesses tonight!

  2. I was going to post a comment at Selling to Small Businesses which has great information, but attention was called elsewhere.

    Your article shows not only to beware of averages, but also of generalisations.

    The deeper you go into understanding your potential and current customers the easier it is to build a strong relationship.

  3. I was going to post a comment at Selling to Small Businesses which has great information, but attention was called elsewhere.

    Your article shows not only to beware of averages, but also of generalisations.

    The deeper you go into understanding your potential and current customers the easier it is to build a strong relationship.
    Sorry… forgot to say great post – can’t wait to read your next one!

  4. Hmmm, I’m surprised that only 73% of businesses in those really high revenue figures have websites. You’d think with all those funds it’d be worth the few hundred bucks to have a presence on the internet.

  5. Better match your offerings with customer needs — If you are offering “starter” websites, you’d be better served to go after the smallest businesses. More advanced services, such as PPC campaign management, are better suited toward larger businesses. You have probably figured this out already, but it pays to regularly cross-check to make sure your offerings are still aligned with your target customer — and that your sales team understands this. It is easy to stray off track.

  6. I say the same thing as David Turnbull, I am surprised that big companies don’t have a website. Couldn’t it be that they belong to a group of companies and they have one central site for several subsidiaries and daughter companies?

    A question for the future is how you could use your site in a good manner and how to start to have a communication with your customers and partners through your presence online. I think that many big companies haven’t got a hang of social media yet.

    Personally, I will continue to develop my own virtual business card on the net so it becomes a “life stream” with my activities. My potential customers, business contacts and friends will get a quick snapshot what is going on in my life so we could have a list of topics to talk about.

  7. Like everyone else, I find myself asking – who are the 20+% of these large businesses that DON’T have a web site and why.

    I don’t think that having a web site is 100% a necessity (although I think you should at least have a page) but I still would love to know what it is about their marketing strategy that made them decide NOT to have one.

  8. These statistics are a bit surprising. I’m with Ivana in the thinking that not every business needs a full service website. I do however believe that every business should have at least one contact/info page.

  9. Amanda and Ivana, I agree with you too. Websites for small business does not necessarily have to be very sophisticated but the contact details is one and very important thing to note of especially these days that people are becoming “a little” dependent on what Internet can offer to them. And this evolution of how people acquire information should be highly regarded by the small businesses too.

  10. Anita, good point. People like to have a crutch in making a decision and averages seem to be one crutch that they often reach for indiscriminately.

    When making legal decisions, business clients often ask me “What do most people do in this situation?” That is usually not a good basis for making a decision.

    For example, today more small businesses are formed as LLCs than any other type of entity, including corporations. I recommend LLCs more often myself, too, but the fact that an LLC is a popular vehicle doesn’t mean that it is best in a particular situation. What “most” people do really has no relevance to the decision.

    As you point out, for averages to be useful, people need to look through the aggregated numbers and learn what the numbers really mean to them.

  11. since there is no one definition for what small business is, you have to go beyond the numbers and really understand how the particular study’s definition.

    Digging deeper really sheds the proper perspective here.

    Thanks!

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