The Launch Doctor - Email Newsletter

The Launch Pad
August 2004

The SOHO Marketplace

For the last decade or so, small businesses and individuals have become a very important factor in the economy, creating more jobs and revenue than nearly all other economic sectors. It is known as the SOHO market, and I’m not talking about a neighborhood in Manhattan or London. SOHO stands for Small Office Home Office. As a consultant with a home office, I am in this group. This market is huge and growing; that’s the good news. The bad news is that the market is geographically dispersed and hard to reach. However, it’s worth trying. Because there are so many of us, we purchase huge quantities of office supplies, computer equipment, software, books and subscriptions, and all types of services: telecommunications, business and health insurance, printing, graphic design, shipping, web hosting, banking, travel, legal, and accounting. If we do consulting in a specific area, we often hire other consultants to provide services we don’t do ourselves; from marketing to sales to programming to financial planning. So if you want to sell your goods and services to this market (and lots of people do!) listen up. I’m going to give you some insight as to how we like to do business.

Definition
Home offices are located in a person’s home; small offices are located outside the home and may have started in the home but then outgrew the space and had to move to another location. A typical home office (and I’ve seen many) is a single room or part of a room that shares a roof with the rest of the house, has an inadequate number of electrical and phone outlets, no effective soundproofing from the crashes/screaming/fights/noisy appliances/barking or hissing just a few feet away, and never enough storage space. Intense clutter is very common, with every available surface covered with paper, equipment, phones, cables and wires. (Of course my home office is the exception, and I can prove it to you, but please call a week ahead of time before you come and visit).

Small offices may be a little less cluttered because there is more space, but there are also more people in the office, too, so it can be just as crazy. Leased space can be expensive, so small companies often are very cramped. Small offices may not have the noise of a home environment, but they likely will have the noise of open offices and cubicles. What does all this mean for those of you who want to sell us your products and services? Distractions! There are constant distractions and we have limited attention spans because we often don’t have enough space or time to even think clearly. So when you call or email us, make it simple and make it quick and deliver your pitch with great clarity.

Time
In home offices, we work solo, which means we wear all the hats: production, marketing, sales, administration, accounting, and finance. We have to work nights and weekends just to keep up, especially during peak times. (As an example, I’m writing this very late on a Sunday night, because that’s the only time I have left.) Small offices are staffed “lean and mean”, and everybody works long hours, pitching in to get everything done. We just don’t have a lot of time to spare, so please don’t waste it. If you sell by phone or in person, make your sales pitch shorter. If you can’t describe your product or service and tell us what you want in 4 sentences or less, you may not get another chance. If you have a website to sell your products and services, make it easy to understand your product or service. Post comparison charts with competing products; that will save us time trying to search for the information on the Internet. Don’t send long and winding emails that don’t get to the point until the last sentence. In fact, because we are all drowning in spam, don’t send emails at all; call us instead. Most of actually prefer phone calls these days. It’s rather old-fashioned, but a nice change and a lot more personal. Even snail mail works better for us, because we can look at your brochures and fliers when we have time. But do include pricing information on the brochures. Don’t make us guess or wonder what the price might be.

Cash Flow
Time to talk money. We SOHO people don’t have enough of it. Ever. Especially when it’s time to pay our bills. No matter what type of business we’re in, we are at the mercy of our own customers and clients to pay us on time, which they rarely do. Therefore, our cash flow is nearly always unpredictable. That makes it difficult for us to make large purchases, and so we rely on credit and payment plans whenever possible to cover short-term cash fluctuations. Some services, such as various types of insurance, have to be paid either quarterly or annually. It would be nice to be able to have more flexible payment plans for such services that fit our cash flow model. I’ve even made suggestions to companies that they offer plans for small businesses, such as wire services for press releases. I contacted one such service to get some information. After several emails and waiting a week, I finally got their price schedule. I had to read through several pages before I got to the actual monthly price. I thought the price was certainly too high for me, and would be out of reach of most small businesses, so I emailed the salesperson back and suggested that they consider a lower cost plan for small businesses. The salesman wrote back and said he’d take it to management. I never got a response, and I never signed up for their service. Are they missing a market opportunity here? You bet they are! Maybe some entrepreneurial individual will create a wire service focused solely on the needs of small businesses. Anyone out there looking for a business to start? There you go.

Customer and Technical Support
When it comes to the SOHO market, the key word here is “small”. We don’t have a lot of people resources to fix our equipment, networks and assorted technology. Your technology may be so good that it “self-installs” or is truly plug-and-play. Right. Offer personalized, onsite technical support for your hardware and systems. You might be surprised to find that a lot of us would be interested in paying you lots of money to do this. It’s worth the investment for us to have our computer systems operating at peak efficiency, and small businesses can ill afford downtime from constant computer crashes or software glitches. Any additional services you can provide to help us resolve our problems quickly will make us a loyal customer for life.

We also want more service on the front end of the transaction, when we are debating what to buy and when. Sales support is usually more available than post-sale support, but even then, customer service representatives are not trained on the needs of small businesses. For example, the long-standing battles between long-distance and local phone services. I have (for better or worse) different carriers for long-distance and local/DSL. In any given week, I get at least one call trying to get me to switch my local service. I’ve done the math at least ten times, and the plan I have is the best combination of prices and services for how I do business. The sales person assumes that because I am a small business, that 99% percent of my calls are local. Wrong! It’s just the opposite, because the vast majority of my consulting clients are out of state or even international. They act surprised when I tell them that my average local calls amount to less than two dollars per month, and there goes their whole sales pitch. Also, I become annoyed that they just wasted my time. I should send them a bill for educating their sales force. Sales support personnel need to be trained on the vast diversity of the SOHO market; it is not a one size fits all marketplace.

Marketing
So, you’ve just read some published market research study about the next gee-whiz product that the SOHO market can’t do without. Well, that report might be true for one small sample of this huge market, but it may not be true elsewhere. Instead of telling us what we need, ask us what we need. We have good ideas and suggestions that will help make money for you. Don’t assume that just because we’re small that we don’t know anything about business. We all have to be marketers if our business is going to succeed, and many of us have learned that the hard way. Reduce the marketing hype and the slogans, and get real. Understand the issues of our businesses, and then help us solve our problems with your products and services. That’s the biggest challenge of all when it comes to the SOHO marketplace, but it’s worth your time and effort.

Quick and Quirky Example
This is my quick, quirky and real example of my long battle with a computer company whose name I won’t mention, but it has four letters in it. I had purchased two identical laptop computers from this company; one to use as my primary computer, and the other to use for making presentations and for onsite client work. Computer number 1 was fairly reliable, and worked pretty well. Computer number 2 was possessed by the devil. Computer 2’s CD-ROM drive somehow would never communicate with the rest of the computer. In addition, Computer 2’s modem would not, under any circumstances, connect with the Internet. I had purchased a two-year, onsite repair, extended warranty from that computer company whose name I won’t mention but has four letters in it. That warranty specifically stated that these types of problems were covered. And so I began the numerous and painful tech support calls to try and resolve both issues- in total, at least 40 hours of my precious time. I must have spoken with at least 10 different tech support people and their supervisors, from Cheryl and Sam to Brandon in Bangalore. While on the phone, they had me try all sorts of software tricks, like reloading Windows, reconfiguring the modem, cleaning the cache. They said it was a Netscape problem or a Windows problem or a Eudora problem, but never their problem. Finally I said, “Look. I have this extended warranty here. It’s obviously some type of hardware problem with the CD-ROM drive and the modem. I want to ship it back to you and have you check it out and re-install everything to get it working.” Their response? Oh no, it’s not a hardware problem. You can only send it to us if it’s a hardware problem. It’s clearly a software problem and you should use a different browser and email system. That’s the issue.

At this point of my 6-month long battle with the computer company whose name I won’t mention but has four letters in it, one of my colleagues suggested a solution. Just take the laptop, drop it from a height of 20 feet onto a concrete slab, and, Oops, you have a hardware problem, she said. I tried it, but it wouldn’t break. It was never repaired. Finally, I gave the computer to a recycling center. My original investment of $2500 was now reduced to zero. I will never, ever, under any circumstances buy another computer from the company whose name I won’t mention but has four letters in it. And many of my small business friends who have heard my story are a little leery about buying anything from this company either.

So, for this tech support example, the lesson is this. Bad customer service creates ill will, and we small business people share our painful experiences. Before I buy anything that costs more than $500, I will call up my colleagues and get their opinions first. One bad example spreads quickly in this marketplace. So, if you want to sell to this marketplace, make sure that the service you provide is superb, and that every customer receives the same level of service regardless of how small the company. We may be small, but together we have power in numbers.

So long from one very tiny 10 foot by 10 foot portion of the SOHO market….

Catherine Kitcho
The Launch Doctor