Big Business Is Targeting Services to Entrepreneurs, Smaller Firms
At 14, Barbara Barsa was a small-business owner, selling Sunfish sailboats with her brothers in Rye, N.Y.
Today, Barsa sells small-business owners on the merits of signing up for an American Express card in her role as vice president of small-business services.
Barsa is one of the scores of top corporate executives busily courting America’s 18 million small-business owners. Once ignored by the corporate behemoths, small-business owners are being deluged with special offers, special services, discounts and freebies from IBM, AT&T;, American Express and Bank of America among others.
“In the last three years there has been a strong surge of targeted marketing to small-business owners,” said Terry Hill, a spokesman for the 570,000-member National Federation of Independent Business based in Washington.
America’s small businesses are attractive customers because they are not only growing faster than big firms but provide more than two-thirds of all new jobs each year. By buying sophisticated telephone systems and fax machines, small businesses can not only act like big companies but compete with them.
The tumultuous mergers and acquisitions of the 1980s and the collapse of such well-known firms as Drexel Burnham Lambert have made selling to small companies more attractive than ever.
“In the past, many corporations did not tailor their products to the needs and desires of small-business owners,” said American Express’ Barsa.
Today, small-business owners who sign up for an American Express card receive $50,000 worth of free disability insurance, plus a $10,000 cash payment to help weather the disaster. Small-business owners also receive substantial discounts on travel and car leasing, services once limited to the big guys.
Bank of America established its Small Business Alliance last year, automatically enrolling small-business account holders in the program. The bank created a panel of advisers to help small-business owners and publishes a quarterly newsletter. It also offers special services and discounts to Alliance members.
Even Big Blue--giant IBM Corp.--is reaching out to small-business owners in a big way. The motivation to woo the small-business community came directly from Chairman John F. Akers, a corporate spokesman said.
Last year, IBM created a special small-business division reporting to William McCracken, a vice president in IBM’s national distribution division in Montvale, N.J.
“This new group is responsible for a very significant part of our marketing thrust this year,” said McCracken. Backed by a whimsical collection of cartoon-filled marketing materials, IBM selected 900 of its 1,900 dealers to serve as “small-business partners.”
These partners not only sell equipment, but organize seminars to help small-business owners overcome their fears of computers. There are financial incentives as well. IBM dealers who sell personal computers to small-business owners receive double sales points, which translate into cash from the corporation.
“A large chunk of our business is with the small- to medium-sized companies, and that’s where the sales opportunities are,” McCracken said.
To make their products more accessible, McCracken said, IBM is moving its equipment and sales staff into places where small-business owners shop. The company opened an experimental “store-within-a-store” in a Sears, Roebuck and is selling computers in office supply “superstores” where many small-business owners shop.
And, in recent months, IBM has given away computer games to show customers how much fun they can have when they aren’t using their new computer for business purposes.
Since every small business needs at least one telephone, AT&T; and Pacific Bell are wooing smaller customers with a variety of inexpensive business services.
“Small businesses are asking for more and more sophisticated services,” said Kathleen Flynn, a spokeswoman for Pacific Bell. “Gone are the days when all they needed was a phone.” Flynn said today’s small-business owners demand the ability to integrate and manage all of their communications, including fax machines and voice mail systems.
AT&T; sales personnel are telling small-business owners that even the tiniest, home-based business can benefit from a domestic or international 800 number.
“With our Readyline service, customers don’t know whether they are talking to someone working on the 52nd floor of a skyscraper or in their basement,” said Bill Clay, commercial branch manager for the Los Angeles metropolitan area.
Clay said AT&T; is focusing its attention on small businesses because the wave of corporate restructuring has created enormous opportunities for small firms. There are 433,000 clients in Clay’s Southern California territory alone--and most of them are small businesses.
“There is a great drive toward large corporations’ reducing their staffs to meet global competition,” said Clay. Many of the workers pushed out of big companies set up their own businesses to provide the same services they were providing when on the corporate payroll.
Under pressure to compete for business after deregulation of the telephone industry in 1983, AT&T; itself began operating more like a smaller business, Clay said. The company, which has shrunk to 285,000 employees from more than 1 million, is now divided into divisions that are expected to operate at a profit.
Clay said most sales personnel enjoy selling to small-business owners because they get a much quicker response to their sales pitches. A small-business owner may say no, but at least he or she comes up with an answer right away.
Best-Selling Author Offers Some Advice
Small-business owners have a better shot at succeeding if they know where to go for good advice, according to Harvey McKay, a Minneapolis small-business owner turned best-selling author.
“I’m 57 and holding, and I still seek advice everywhere,” said McKay, who bought an ailing envelope company when he was 26 and turned it into a $35-million-a-year success.
“I’m a believer in superior information: Decisions are easy to make, but the data to make them takes digging out.”
McKay recently followed up his best-selling “Swim With the Sharks Without Being Eaten Alive,” with “Beware the Naked Man Who Offers You His Shirt,” published by William Morrow & Co.
The book combines his personal business philosophy with advice and suggestions on how to flourish on your own or while working for someone else.
No matter how small your business is, McKay said, it is essential to hire the best possible people. In fact, he has personally hired nearly every one of his 350 employees at McKay Envelope Corp.
“I go to their homes, meet their families and interview their kids,” he said. “I move mountains before bringing another person on the payroll.”
McKay, who spends much of his free time counseling young people about business, said starting your own business is “indescribably hard”--but worth it.
On the road much of the time promoting his book, McKay recommends that every business owner turn his or her car into a university by listening to audiotapes. “There are hundreds of tapes available to make your own mini-MBA program.”
