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Should You Market Your Product to Enterprises or Small Businesses? Here's How to Decide. Deciding whether to market to a small business or an enterprise can be a challenging decision. Here's how to know which you should go after.

By Fady Edited by Chelsea Brown

Opinions expressed by Entrepreneur contributors are their own.

Small businesses and enterprises might exist in the same industry, but they differ greatly in their needs, resources, and goals. Due to the varied nature of budgets, customer bases and agility levels, it's best to target one or the other when marketing a new product or service.

There are a few key determining factors that can help you determine whether your product is best suited for a small business or an enterprise. When you zero in on these strategies, you'll be well-equipped to make the best decision for your business and maximize the impact of your marketing campaigns.

Related: Selling to Small Businesses? Here's What You'll Need to Succeed.

How to decide between small business and enterprise

When deciding whether to cater to small businesses or enterprises, ask, "Has this been done before, and has it been done well?" The enterprise landscape is filled with strong competitors. Depending on the product or service you're offering, you may stand out more in a small business market, especially if you provide an enticing price point and performance level.

This scenario was true for Vagaro: Starting out, most players in the salon and spa space were going after the larger, more wealthy businesses. But after further research, we found that a majority of companies in the industry only had a few employees. It made sense to deliver less expensive software and target smaller companies that were often overlooked.

Enterprises also tend to shell out huge sums of money in exchange for a customized product, with the expectation that you'll continue to iterate to meet changing customer needs. So, start by thinking about how involved you're willing to be. Then, consider whether your goal is based on profit or if you want to dedicate efforts to building out your customer base.

Enterprises can afford to write big checks for your product, so you only need a few of these partners to keep your business afloat. The drawback, however, is that if you lose even one of those enterprise clients, you run the risk of losing major revenue.

On the other hand, when you target small businesses, you may not turn a profit as quickly, but you'll have a larger customer base. If you lose a few partnerships here and there, you'll still be relatively secure. Small companies are also in a position to offer you more relevant and timely feedback, and they'll be more involved in your growth process because your relationships with them are more intimate.

Related: 6 Key Things to Consider When Bringing a Product to Market

When small businesses make sense

In general, smaller businesses typically aren't as seasoned. They may be just as efficient and innovative as enterprises, but they usually do not have the same abilities in terms of finances and resources. They can't always afford to learn, plan and iterate over and over again. And in many ways, they're still figuring things out. Because of this, these smaller businesses won't want to pay for a product or service that can't be proven. They need to see demonstrated proof that your product will improve their bottom line in some way. So, small businesses are the ideal choice if you have a less experimental product that can guarantee results.

Unlike enterprises, which are usually more interested in products that can manage or optimize existing accounts, small businesses are more concerned with growth. When you target them, you need to consider the ways that your product can help them gain visibility and expand their reach.

Catering to smaller businesses is often equally rewarding for both sides. We noticed that many of our small business clients eventually grew to enterprise levels. In some cases, offering a product or service to a small business is an opportunity to grow alongside them and be a part of a monumental journey. The more they grow, the more you can, too. If you find yourself asking how your product can help influence the growth of another company, small businesses might be a good partnership opportunity.

When enterprises make sense

If you focus heavily on innovating, connecting with enterprises can be extremely advantageous. These larger businesses have the budget to experiment, so investments from these types of businesses will allow you to test the waters, build out new iterations and shape your product into something more powerful. Because an enterprise will account for a bigger percentage of your profit, though, this route naturally involves more risk.

Enterprises also have an edge in networking since they're familiar with key industry players and have desirable connections. They make it a competitive point to know the market and what they need to do to influence it. If you want to expand your reach and elevate your company's status, partnering with a well-connected enterprise can help you stay ahead. But enterprise businesses have numerous organizations vying for their attention, so getting your foot in the door will require some strategic thinking on your part. Partnering with at least one other organization can boost your reputation and convince enterprises to take you more seriously.

Related: Selling Your Product to a Big Chain in 5 Painstaking Steps

Over time, both small businesses and enterprises can become part of your operations

Ultimately, when it comes to targeting small businesses or enterprises, the decision is yours. Each option has its own set of advantages and drawbacks that you should carefully weigh before making a final call. However, if your product can guarantee results for smaller companies and provide them with visibility as they grow, then this might be the best choice for you.

On the other hand, partnering with an enterprise could help you expand your reach and elevate your company's status by leveraging its industry connections. Whichever route you decide to take will require some strategic planning — with careful consideration and effort, you can not only grow your business but also establish life-long partnerships.

Founder and CEO of Vagaro

Fady "Fred" Helou uses creative solutions to solve common problems and has built Vagaro into a business that helps more than 150,000 service providers annually.

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