One Big Reason Your Small-Biz Sales Are Slow: Your Customers Are Tiny

Small and medium businesses -- SMBs -- are the new enterprise for tech companies in the business-to-business space. Hey, growth eventually requires new markets, and the large businesses have been fertile ground for decades. But there is a problem. Small businesses may be a lot smaller than many companies have realized, according to a study that the U.S. Census Bureau recently released.

According to the Census Bureau, almost 52 percent of the companies that responded to the 2007 survey of business owners (most recent data available) operated out of their homes. Of these, not even 7 percent had annual revenues of $250,000 or more; 57.1 percent of the home-based businesses brought in less than $25,000. And for half of the owners, their businesses were their primary source of income.

So, of the relatively little money coming in, a lot has to go to the owner. If that wasn't enough, most of these businesses are, as you might expect, started on low to no capital. Just over 30 percent started with less than $5,000, and for more than 10 percent, an owner used a credit card to fund at least part of the business.

Lest you think that the numbers may not represent the real world, the Census Bureau got data from more than 2.3 million businesses. There's still plenty of room for error, but these results have to make any company focusing on SMBs to seriously reexamine its assumptions.

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