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Mastering The Small Business Market:

A Guide To Understanding 4 Critical Credit Risk Trends

Selling To SMBs: 5 Ways Small-Business Data Gives Your Company A Competitive Edge

CommerCial information SolutionS

Selling to SMBs: 5 Ways Small-Business Data Gives Your Company A Competitive Edge 2

Data: The Key To Cracking The Small-Business Market....................................................... 3

1. The Right Small-Business Data Cuts A Complex Market Down To Size............................ 4

2. The Right Small-Business Data Solves The ‘Spray And Pray’ Dilemma........................... 5

3. The Right Small-Business Data Gives You Visibility Into Risk.......................................... 6

4. The Right Small-Business Data Helps You Help Your Customers..................................... 7

5. The Right Small-Business Data Keeps You One Step Ahead Of Your Competitors........... 8

Conclusion: What Does It Mean To Have The Right Small-Business Data?.......................... 9

Connecting The Dots To Get A Competitive Edge................................................................ 10

Equifax Commercial Information Solutions Has The Answers............................................ 11

Table of Contents

Selling to SMBs: 5 Ways Small-Business Data Gives Your Company A Competitive Edge 3

Access to the right data – accurate, timely and relevant data – is the key to reaching your ideal small-business customers.

Data: The Key To Cracking The Small-Business Market

There are roughly 28 million small businesses operating in

the United States today.1 As a group, these firms, defined as

independent businesses with fewer than 500 employees, represent

nearly half the nation’s private-sector output.2

You already know that providing these small firms with products

and services is a massive business opportunity. These companies

produce trillions of dollars in products and services; in the process,

they buy trillions of dollars in raw materials, supplies, services and capital goods.3 The closer you get to the small-

business market, however, the more challenges you’ll see. How do

you identify opportunities – or manage downside risk – in a market

with millions of unique players? Where do you start, how do you

reach them, and what drives their buying behavior? How do you

know when a small-business customer is poised for growth?

It’s no wonder that so many B2B companies consider the small-business market such a tough nut to crack.

This E-book offers a way to make sense of the crowded,

competitive, fast-changing small-business landscape. It advocates

that access to the right data – accurate, timely and relevant data – is the key to identifying and reaching your ideal small-business customers. In the process, using the right data at the right time can target your sales and marketing efforts more effectively, as well as minimize the credit and resource allocation risks associated with traditional, hit-or-miss strategies

for reaching small-business customers.

Selling to SMBs is never going to be easy. But with help from

today’s data-driven sales, marketing and risk-management tools,

it can be a more predictable and profitable activity. We’ll show you how.

Selling to SMBs: 5 Ways Small-Business Data Gives Your Company A Competitive Edge 4

Trying to find your ideal small-business customers using traditional mass-marketing techniques is a recipe for failure.

The Right Small-Business Data Cuts A Complex Market Down To Size

Nobody just targets “small businesses” with a product or service

- at least not if they plan to turn a profit.The reason why is

pretty obvious: This is a colossal market. There are millions of

companies; some employ hundreds of people, others are one-

person, home-based businesses. Some earn millions of dollars in

annual revenue, others never turn a profit. Some operate multiple

locations across the country, others serve a particular community.

The good news is that no matter what your company sells, some of these small businesses are sure to need it. But if

you’re trying to find these ideal customers using traditional mass-

marketing techniques such as display advertising and bulk mail,

you’re going to suffer thousands of misses for every hit – and

you may not hit your target at all.

What you need is small-business data that can help segment

this huge and diverse market based on a vast number of relevant

traits. That includes obvious firmographic information such as a

company’s location, industry vertical and employee count.

But what if you could also identify new small business growth opportunities within your consumer base? Or segment your small-business customers based on the likelihood that a business will fail or create a serious credit risk? What insights

could you gather from a potential customer’s recent purchases/

leases of property, vehicles or other big-ticket assets? How about

understanding whether a potential small-business customer is

primed for expansion or gun-shy about growth?

These are just a few of the opportunities you get from taking a

data-driven approach to segmenting, analyzing and understanding

the small-business market. They’re the best way – and really the only way – to cut this colossal task down to a manageable size.

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Selling to SMBs: 5 Ways Small-Business Data Gives Your Company A Competitive Edge 5

Small-business owners are overwhelmed with irrelevant marketing messages.

The Right Small-Business Data Solves The ‘Spray And Pray’ Dilemma

B2B marketing organizations of all sizes are being asked to do

more with less. According to a recent MarketingSherpa

study, more than 60% of B2B marketers cite a lack of resources in staffing, budgeting and time as their single biggest challenge.4

At the same time, a growing number of marketers see diminishing

returns from traditional marketing tools. In fact, the same study

found that these tactics, from SEO and email to telemarketing

and direct mail, are delivering lower ROI almost across the board.5 These challenges don’t bode well for companies that

expect to reach small-business customers using traditional,

broadly defined and segmented marketing campaigns. Small-

business owners are overwhelmed with irrelevant marketing messages; it’s absolutely essential to reach them with timely,

targeted communications that speak directly to their most pressing

business pain points.

Anything else is a waste of your company’s precious marketing

dollars and your sales reps’ time.

This dilemma reinforces the need for a different, much smarter approach to identifying and targeting your ideal small-business customers. Your company needs data that can turn

your marketing campaigns from “spray and pray” into finely tuned,

pinpoint-precision activities.

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Selling to SMBs: 5 Ways Small-Business Data Gives Your Company A Competitive Edge 6

Managing credit risk requires visibility into your small-business customers’ current financial obligations as well as historical credit data.

The Right Small-Business Data Gives You Visibility Into Risk

Let’s be honest: The small-business market is a risky place to

operate. If your company can’t manage that risk, then you’re going

to be in for a pretty rough ride.

It’s not as bad as some doomsayers make it out to be. Those

numbers you hear about 90% of all small businesses failing

within the first year are exaggerated.6 But the truth is still pretty

intimidating: Depending on the industry, between one-third and one-half of all small businesses survive longer than five years. 7 About 10% of the businesses that do close will face

liquidation or bankruptcy.8

How does this impact your own business? There’s risk from

customer churn, as you constantly sink money into finding new

small-business customers to replace those that close their doors.

There’s risk in not knowing whether today’s key account will be

tomorrow’s gap in your revenue forecast. There’s risk in making

the right hiring and investment decisions to stay on top of

market conditions.

Perhaps most of all, there’s risk in extending credit to small-business customers that may lack the ability to pay you on time – or at all.

How do you manage this risk? You need visibility – the ability to see into your customers’ current spending and financial obligations as well as historical credit data. You need to know

whether a small-business owner’s personal finances might impact

his or her business operations. You need to know when red-flag

events, such as slow payments, late payments, liens and legal

filings, increase your own credit risk exposure.

There are many ways to get this data, but they aren’t all created

equal. Managing risk means getting data that’s insightful and timely. It also means getting data that’s comprehensive enough

to give you a fair and thorough picture of a small firm’s true credit and business risk.

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Selling to SMBs: 5 Ways Small-Business Data Gives Your Company A Competitive Edge 7

The right insights into your customers’ spending, investment and credit choices makes it possible to anticipate problems and recognize opportunities.

The Right Small-Business Data Helps You Help Your Customers

The U.S. economy is improving, but it’s a recovery in fits and starts.

Growth is coming slowly, and at times it feels like it’s barely coming

at all. For every challenge the economy overcomes, it seems like

there’s another one looming on the horizon.

This volatile and unpredictable climate is wreaking havoc on the nation’s small businesses. The National Federation of

Independent Business (NFIB) optimism index, a closely-followed

barometer of U.S. small-business trends, opened 2013 at what the

organization called a “recession level” reading.9 Other NFIB survey

data suggest that small businesses are nearly as reluctant to

hire and to invest today as they were during the worst of the

2009 recession.10

Some other results from NFIB and Wells Fargo/Gallup surveys

suggest there’s a real cause for concern here. According to both sources, many small-business owners report ongoing

cash flow problems, and nearly 30% describe their current financial situations as “somewhat” or “very” poor.11

Companies that serve the small-business market know that cash

flow problems can be especially damaging to their customers. It’s

not just a matter of knowing when to cut back or cut off credit to a

struggling small business; it’s also a matter of understanding when

a different product offer, price plan or payment terms can enrich your relationships with small-business customers and set them up for success.

You can’t predict what the future will hold for the economy, and

it’s probably futile to try. But you can apply insights into your

customers’ spending, investment and credit choices to anticipate problems, recognize opportunities and gain some much-needed visibility into your own operations.

4

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Selling to SMBs: 5 Ways Small-Business Data Gives Your Company A Competitive Edge 8

Everybody wants access to better information about their small-business customers. But not everybody is going to look in the right places to find it.

The Right Small-Business Data Keeps You One Step Ahead Of Your Competitors

That MarketingSherpa study we discussed earlier makes one thing

clear: If you’re struggling to get ROI from your small-business

marketing, you’re not alone. Your competitors are also being asked

to do more with less; they’re scrambling for resources, and they’re

watching familiar tools and tactics come up lacking.

In other words, everybody wants access to better information about

their small-business customers. But not everybody is going to look in the right places to find it.

Many of your competitors will continue to scrape the web for

small-business market research and contact information. That’s

a losing battle; just one-quarter of small businesses even have

an active web site.12 Other public data sources are just as

unreliable, since thousands of small businesses change their

addresses and telephone numbers each week, and hundreds even

change their names.13

Even the data your competitors already hold on small-business

customers and prospects is a wasting asset. The average B2B database decays at a rate of 2% a month or nearly 25% a year.14 Best-in-class B2B companies will treat these small-business data challenges as a top priority. These companies

want access to small-business data that is fresh and current.

They want their sales reps reaching the right person with the right

message when they pick up the phone or hit the streets.

That’s a tremendous competitive advantage – especially at a time

when many companies that serve small businesses are not yet

practicing best-in-class, data-driven marketing.

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Selling to SMBs: 5 Ways Small-Business Data Gives Your Company A Competitive Edge 9

Bad small-business data is worse than having no data at all.

Conclusion: What Does It Mean To Have The Right Small-Business Data?

We’ve painted a pretty big picture when it comes to showing just

how many things the right data can do for companies that serve

the small-business market. Now, let’s fill in the details: What does

it really mean to assemble a single set of data resources that can

cover so many different bases for your company’s sales, marketing

and credit activities?

First, as we have pointed out, it means being absolutely certain

you’re working with insightful, relevant and up-to-date information on millions of small businesses operating in the

United States. Bad small-business data is actually worse than no data at all.

Second, it means having access to data from a wide variety of sources, including:

§ Public records, including liens, judgments and bankruptcies;

§ Firmographic data that indicates a small company’s size, industry and geographic location;

§ Consumer and small-business data linkage to better manage your existing accounts;

§ Business credit histories, including supplier payment and lease histories;

§ Business spending and purchasing trends that indicate a small company’s preferences;

§ Business banking histories that reveal unique insights into cash flow and credit risk;

§ Individual credit histories for millions of sole proprietorships that depend entirely upon their owners for funding.

Selling to SMBs: 5 Ways Small-Business Data Gives Your Company A Competitive Edge 10

You can’t eliminate risk and uncertainty from serving the small-business market. But you can minimize unnecessary risk.

Third, it means having access to analytical tools that allow your

company to get fast, useful and comprehensive answers to

questions such as:

§ Which small businesses in a given region are likely to have a current need for your company’s products?

§ What is my small business market share based on industry benchmarks and share of wallet with current small business customers?

§ How much is a small business likely to spend?

§ Who calls the shots when it’s time to make a purchase, and how can you reach them?

§ Will a new small-business customer pose a possible credit risk?

§ Should we pay closer attention to a current customer’s financial situation?

§ Which small business customers are likely to respond to your business product offers?

You can’t eliminate risk and uncertainty from serving the small-

business market – that comes with the territory. But with the right

small-business data and the right analytical tools, you can

make better use of your sales and marketing resources, minimize unnecessary risk and always stay one step ahead of your competitors.

Connecting The Dots To Get A Competitive Edge

SU C

C E SS

Equifax Commercial Information Solutions is dedicated to helping your company achieve

its goals when selling and marketing to small businesses, and assessing small-business

credit risk. We’re a leading provider of small business intelligence. We provide best-in-

class business credit and marketing data, predictive analytics and unmatched expertise

to help you grow your business intelligently.

From small business to enterprise customers, prospects and suppliers we can help

you know and grow your customer base and mitigate risk. Our proprietary data and

personalized service enables you to improve the precision of your sales and marketing

efforts with quicker access and unique visibility into customers and prospects.

Equifax Commercial Information Solutions Has The Answers

Equifax and EFX are registered trademarks of Equifax Inc. Inform > Enrich > Empower is a trademark of Equifax Inc. Copyright © 2013, Equifax Inc., Atlanta, Georgia. All rights reserved.

EFX-USA-00129-03/28/13

To learn how Equifax can give your company a competitive advantage in servicing the small

business market, call 1-877-761-8379 or visit www.equifax.com/commercial.

Contact Us Today

Sources

1 http://www.sba.gov/sites/default/files/FAQ_Sept_2012.pdf

2 http://www.sba.gov/sites/default/files/FAQ_Sept_2012.pdf

3 http://research.stlouisfed.org/publications/net/page24.pdf

4 http://ftp.marketingsherpa.com/Marketing%20Files/PDF's/Executive%20 Summary/2012B2BBRMExcerpt.pdf

5 http://ftp.marketingsherpa.com/Marketing%20Files/PDF's/Executive%20 Summary/2012B2BBRMExcerpt.pdf

6 http://smallbiztrends.com/2012/09/failure-rates-by-sector-the-real-numbers.html

7 http://smallbiztrends.com/2012/09/failure-rates-by-sector-the-real-numbers.html

8 http://beyondeconomy.pbworks.com/w/file/fetch/44809076/Causes%20of%20 Bankruptcy.pdf

9 http://www.nfib.com/press-media/press-media-item?cmsid=61702

10 http://www.nfib.com/press-media/press-media-item?cmsid=61702

11 http://www3.cfo.com/article/2012/11/growth-companies_small-business-revenue- jobs-cash-flow-sentiment-post-election-survey

12 http://blogs.sap.com/innovation/analytics/data-decay-can-silently-cripple-your- business-infographic-010183

13 http://www.statisticbrain.com/businesses-with-no-website-statistics/

14 http://chiefmarketer.com/b2b/data-quality-still-struggle-b2b-marketers