Tag Archives: sole proprietor

How Small Business, Sole Proprietors, and Entrepreneurs Are Apples and Oranges

Fruit Basket 2
Fruit Basket 2 (Photo credit: AditChandra)

This post starts a new category for this blog, named — for lack of a better name — “Politics Big Biz Small Biz.” It’s based on the assumption that politicians and big businesses want votes and money from an extremely diverse collection of people they call small business. Who are in fact some small business owners, some small business managers, some small and single-person service businesses, some startups, some entrepreneurs, and some others, who have relatively little in common with each other.

To understand how this really works, start by exploring the definition of “small business.” Data collectors define that mostly by how many employees, but definitions are all over the map. The federal government’s Small Business Administration (SBA) includes businesses with as many as 1,500 employees and as much as $21.5 million annual sales, depending on type of business details. Other studies and government agencies cut off “small” at 5, 10, 100, 500 employees.

In practices, buying patterns, and decision making, not to mention motivation and definitions of success, how different is a business with 1,500 employees, or doing more than $20 million a year, from the graphic artist or consultant on her own, or the dry cleaner on the corner? That’s huge. These are not the same thing.

And entrepreneurs? Some people think everybody who owns a business is an entrepreneur. Some think that includes the massage therapist and freelance writer, the self employed; but a lot of them would never call themselves entrepreneurs. And thoughts, writing, ads, and products marketed for entrepreneurs won’t reach these people who don’t define themselves as entrepreneurs.

Amazing fact: More than 22 million businesses legally registered in one way or another in the U.S. have no employees. Some are just service people getting by, some are economic freedom fighters, and some are fake businesses that exist for tax purposes only. They defy classification.

True story: I ran into a business that classified the so-called small business market according to the decision making pattern. There were those in which the owner decided, those in which a functional expert decided, those in which a committee decided, and some others.

What do you think: Is it a small business if it has no employees? Is the owner of a 50-person small business an entrepreneur? Are entrepreneurs only the startups looking for funding? Is the family running the new dry cleaner business on the corner an entrepreneurial family?

Amazing fact: business owners’ political opinions are not predictable. Owning a business doesn’t make a person belong to any party or interest group.

Conclusion: People who own businesses, particularly people who start businesses, but also people who run their own one-person small business, are more likely to be go-it-on-their-own type people than joiners or followers. That’s by definition. So we defy classification systems.

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Big Mistake: Meaning Mismatch in Marketing

Yesterday I discovered, to my surprise, that a good friend who does licensed massage therapy said she doesn’t think of herself as an entrepreneur.  In her mind, entrepreneurs want to get outside investment, hire employees, and grow their businesses fast. People like her think of themselves as self employed, sole proprietor maybe, small business owners probably. And those professionals, the doctors, lawyers, accountants and such, they don’t think of themselves as entrepreneurs either. I think of them all as entrepreneurs.  But what if they don’t?

Business mistake: What if you want to reach that larger group, and you address them as entrepreneurs in your marketing, but they don’t think of themselves that way? So most of the people you want to reach don’t ever realize you’re talking to them?

What about you? Official stats say there are about 27 million businesses in the United States and about 21 million of them have no employees. What’s an entrepreneur to you? There are only a handful, a few thousand, that meet that stiffer definition. What matters is whether the target potential customer self identifies into the group. If a business is aiming at one group and using a word that stands for the other, that’s a big mistake.

This isn’t just semantics. It’s not about language or definitions. It’s about the fundamentals of marketing.

In human communication, the listener assigns the meanings to the words. Not the speaker. You don’t get to tell the audience what your word means. They tell themselves.

That’s why so many marketing images show an arrow hitting a target. This kind of meaning mismatch is one really powerful way to miss.

(Image: bigstockphoto.com)