Yes, less than one percent of US firms translate to 61% of revenues however the sales costs of achieving these sales are extremely high.
As Mike points out:
“…the point is that direct sales organizations cannot serve the vast majority of businesses on the planet.”
The web is what is changing this. Quoting Mike:
“Far fewer businesses have been created, at least in high technology, by serving the small- and medium-size business segment as they were hard to reach. But that’s all changing rapidly.”
Though the post addresses the IT industry and primarily business software firms, we can expand to other businesses as well.
There are about 20 million businesses in the US with no employees (only the owner). The opportunity to sell to them is huge but reaching them (unless you are one of those big businesses with a large direct sales force or channel) is only possible if using the internet. Opportunities that were not available a decade ago and that are only growing as the internet and other online tools evolve.
Phone.com is a good example of a business that could not have operated with the low cost model we have in the “old world”. Phone.com does not have a physical sales force and is targeting entrepreneurs and the SOHO (Small Office – Home Office) or VSB (Very Small Business) markets from our website and through online marketing affiliates.
The ability to keep our overhead low allows us to improve our service and pass on costs savings to our customers.