Business Technology Solutions and Gaping Chasm Between SOHO & True B2B

If your company is new to providing business technology solutions, it’s important to make sure that you’ve very crisply defined your target market. Why?

Because there’s a huge gaping chasm between the recurring IT needs and profitability of SOHO (small office/home office) clients vs. true B2B (business to business) clients. In this article, we’ll look at the pros and cons of each market segment and what your firm needs to be successful with each.

SOHO Technology Solutions

So, once a business technology solutions firm has differentiated between the B2C (business to consumer space) vs. B2B, it’s vital to also further segment how you define the small business market.

At the entry level point of the B2B segment, you’ll find SOHO clients – also commonly called micro small businesses.

What defines this segment?

• 1-10 computers (or equivalent supported mobile devices)

• 1-10 employees

• $100,000-$1,000,000 in annual revenue (or your local currency equivalent)

• No dedicated server yet

At this size, you’ll be expected to have strong competency in installing and supporting:

• Desktop PC and/or Mac hardware

• Notebooks

• Tablets and smartphones

• Printers

• Modems (cable, DSL)

• Power protection

• Desktop/notebook OSes

• Desktop office automation applications

• Virus/malware protection

• Personal firewalls

• Remote control

• Peer-to-peer LANs

• SOHO routers and Wi-Fi access points/adapters

So when targeting micro small business clients, one big advantage is that you don’t need incredibly advanced IT skillsets. This makes hiring and retaining staff a heck of a lot easier.

But on the flip side, SOHO clients, especially at the lower end of the size range, rarely have much of an annual budget for outsourced IT services – perhaps $1,000 to $3,000 per year (or your local currency equivalent).

So while SOHO clients can be substantially more lucrative than consumers (B2C), the relatively low budgets of SOHO clients for IT services severely limits the kinds of lead generation and client acquisition campaigns that your company can afford to invest in.

B2B Technology Solutions

So once a small business has grown beyond the definition of a SOHO or micro small business, it’s now considered a true B2B client.

Not that clients below this size are “false” or “fake” or anything like that. It’s just that SOHO technology solutions can be challenging to profitably deliver without tremendous economies of scale – especially if lots of regular on-site visits or one-on-one handholding is required.

So how do you define the B2B segment, also commonly referred to as where sweet spot small business clients reside?

• 10-50 computers  (or equivalent supported mobile devices)

• 10-100 employees

• $1,000,000-$10,000,000 in annual revenue (or your local currency equivalent)

• 1 or more dedicated servers

And just as SOHO technology solutions require a certain level of skillset competence, B2B technology solutions have their own technology requirements as well that begin with a baseline of all technical skills required to support SOHO technology solutions plus:

• Servers and appliances

• SANs/NAS and RAID

• Backup/disaster recovery

• Business-class routers, switches, access points, and power protection

• Server NOSes

• Client-server and cloud-based messaging, VoIP, database, accounting, and CRM applications

• Virtualization and VPNs

• Web servers, authoring tools, and CMSes

• Business-class firewalls, encryption, and intrusion detection

With true B2B solutions, your company typically fills a vital need for clients that have very serious IT needs, but don’t have the need or budget to hire a full-time, salaried IT manger or CIO.

So why don’t these clients hire a part-time IT person? Excellent question!

Most available part-time IT labor typically would lack the variety of skills or advanced skillsets required to support and coordinate all IT needs.

In other words, IT professionals with several years of hands-on experience and multiple certifications are in very high-demand in most areas and as a result gravitate towards much higher-paying full-time career opportunities, rather than stringing together a collection of much lower-paying part-time IT jobs that lack key fringe benefits and a well-defined career path.

Within this business technology solutions segment, with companies doing anywhere from $1,000,000 to $10,000, 000 in annual revenue, it’s very common to find budgets for outsourced IT services in the $2,500 to $5,000 per month range – or $30,000 to $60,000 per year annualized.

At this level of revenue generation, regularity, and lifetime value, the marketing plan for reaching true B2B clients can be very well funded to take a long-term approach to lead generation, client acquisition, and retention.

Now the mix of required services, price points, and required skill sets will vary greatly, even within these two broad categories of SOHO and B2B. Why? Because you’ll still inevitably find highly-fragmented target markets where needs are often industry-driven.

In other words, the law office with 15 employees will have vastly different IT needs and budget than the boutique biotech research firm with 20 employees.

The Bottom Line

In this article, we looked at the pros and cons of providing SOHO technology solutions vs. true B2B technology solutions. We listed out some of the key demographic attributes, as well as required IT skill sets. Plus we showed you how the volume of consumed outsourced IT services drives what your company can afford to invest in lead generation and client acquisition.

How does your business technology solutions company generate leads and acquire new customers? What technical skills have you found to be in greatest demand? Please share your tips, hints, and feedback in the Comments section below. 

And to follow-through on the tips introduced in this short article, be sure to download your free copy of the special report on How to Start a Computer Consulting Business: 6 Proven Ways to Build Your Initial Client Base. 

Creative Commons Image Source: flickr otubo