Small Businesses to Tech Providers: Nah, We’re Good
If you’re a technology entrepreneur thinking about trying to crack the small-business market, be prepared for an unenthusiastic reception.
That’s a big takeaway from a recent survey of small businesses in the Boston area sponsored by Dell and Intel. After asking 101 local small companies (less than 100 employees), the survey found 91 percent “satisfied with how their tech needs are being met.”
For example: Only 12 percent of the survey respondents said they rely on “outside technology companies” for their IT needs. Most (55 percent) handle it themselves, or use freelancers (33 percent). On the other hand, some 41 percent say their needs for technology products and services are “becoming increasingly complex.”
Now, as with many surveys, this one has some caveats. It was an online survey of a small sample of businesses, which means the margin of sampling error is pretty high at nearly 10 percent. So discount the findings that way. (I’ve posted a one-page summary at the bottom of this post. It isn’t hosted online anywhere by the sponsors.)
But even with those statistical swings factored in, the survey gives a sense of how hard it can be for service providers to penetrate the small-business market.
The local, small-business market has become a graveyard for many technology startups over the years. In the past few years, many thought Groupon may have finally unlocked the potential of applying the Internet and connected consumers to small business. But that’s not looking like such a hot bet these days.
Investor and respected startup blogger Chris DeVore (one of our Xconomists) says that, despite the smartphone boom, local business is still a very risky bet: There’s not much money in the sector, serving it doesn’t scale rapidly, and the ideas are often just too obvious.
DeVore comes by his skepticism honestly, too. “I spent four years of my life (and several million dollars of Brad Feld’s money—sorry Brad) trying to build a sustainable business in online-to-local customer engagement at Judy’s Book,” he says.
So, will tech entrepreneurs finally open the floodgates of small, local business? It’s gotta happen eventually. Dell and Intel, the sponsors of this particular survey, sure hope so—Dell is in the midst of a nine-city tour led by entrepreneur-in-residence Ingrid Vanderveldt to reach out to local businesses, part of its bid to build connections with the market.
And as we’ve written several times recently, certain sectors like mobile payment systems are attracting a lot of attention from startups and their investors. But just remember: It’s not going to be easy.