Ninety-eight percent of businesses around the world are small companies with less than 100 employees. The 98/2 proportion of small to big is the same in every market we serve, including The United States, The United Kingdom, Canada, Australia and New Zealand. The chances are, if you took 100 businesses operating in your town, 98 of them would be small.
That means saying you target “small business owners” is akin to saying you target businesses, which sounds to owners as if you have no target at all. What does a self-employed individual running a photography studio from his home have in common with the owner of a $15-million-dollar manufacturing facility?
Which is why saying you target small businesses becomes like wallpaper for your target market: nobody notices it. Instead, in order for a business owner to properly evaluate if you’re the right advisor for them, it’s important to tell them specifically who you like working with.
The easiest and most popular way to define your ideal customer is by annual revenue (turnover). For example, you might say: “We do our best work for companies that have annual revenue of between $2 million and $15 million in sales.”
Being specific about whom you want to work with ensures that prospects know they have found the right home with your firm. Keep in mind that many business owners are aspirational, so even if they have a million dollars in turnover, they won’t hesitate to call the company that serves the $2M-15M space. The opposite, however, is not true. A company that has $15 million in revenue will feel like they have graduated beyond the point where a firm targeting the $2-15M space could be helpful.
Ries & Trout
Al Ries and Jack Trout wrote their book on marketing positioning way back in 1994. Law #13 of the 22 Immutable Laws of Marketing is the “law of sacrifice.” To paraphrase, in order to get the attention of your prospect, you must give up something. There are three things you can give up, and one of them is a portion of your target market.
Ries & Trout argue that to appear more desirable to a specific group you have to publicly state who you don’t want to do business with. Therefore, those people who do fall into your target market reason that if you’re willing to walk away from business that doesn’t quite fit, you must do a superb job with the kind of clients that do meet your stated target. “Narrowing your focus broadens your appeal.”
Claiming you target companies with between 1and100 million dollars in revenue will sound to the owner like you don’t have a target, or that you do 99 percent of your work for 1-million-dollar businesses yet you sure would like to help a 100- million-dollar business. Be honest with yourself and your prospects; if you do your best work serving companies with less than a million in sales, explain that to them.
The Strategic Coach is a Toronto-based coaching organization that gets this right. They offer a program for business owners who have a personal income of $100,000 to $500,000 and another program for entrepreneurs with a personal income of $500,000 or more. They are specific about who they want to work with.
Go public with your ideal customer and explain who you want as customers. Include the size of company you can help, as well as any other defining characteristics like industry or life stage. Go further by declaring who you’re not set up to serve. At the Strategic Coach, if you can’t draw a $100,000 per year out of your business, you need not apply.
It may feel like you are limiting your market by declaring who you want to work with but the opposite is true. The more public you are about your selection criteria, the more attractive you are to people who meet your ideal customer characteristics.
John Warrillow is the founder of The Sellability Score & the author of Built to Sell: Creating a Business That Can Thrive Without You.