U.S. smaller businesses (defined as “small” when there are up to 99 employees and “medium” with 100 to 499 employees) can be split into four market segments, according to Analysys Mason.
You likely would not be surprised to find that bigger spenders also are firms that face less competition--and therefore are more profitable--while also being larger firms overall. That has traditionally been the case.
It would not surprise you that firms in financial distress, or in declining markets, spend less than growing or prosperous firms. You also would not likely be surprised if growing firms were more focused on growth--and investing for growth--while most declining firms are more interested in harvesting revenue for as long as possible and spending as little as possible.
That is one way to interpret the way SMBs can be characterized in terms of their information technology spending volumes.
Analysys Mason sees SMBs in four spending groups: super spenders, ahead of the curve, constrained strugglers or disengaged groups.
What also might catch your attention is that firms that spend more tend to be in well-protected industries with moats of some sort that keep competitors out. They tend to be larger, growing and likely more profitable.
The firms that invest less are all in high-risk industries, perhaps declining industries, are smaller and in financially-stressed industries.
Source: Analysys Mason, 2020
The super spenders make up roughly one third of the Analysys Mason sample and tend to be found in well-protected industries such as professional services.
The constrained strugglers and disengaged SMBs are mostly small businesses in challenged industries who focus on cost cutting and survival. These businesses tend to be found in high-risk industries such as retail, construction and manufacturing.
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