21C marketing strategy and tactics offered by marketing service providers are out of reach for many Canadian small businesses. There is a way through Mentor Partnerships.
A discussion paper
By Grant Lee, CPM
In my thirty years of marketing, I have witnessed the transition from 20th century to 21st century marketing strategy and tactics. Strategy and tactics developed in the mid 20th century, and applied through the last quarter of the 20th century, did not work well for many owners of small businesses. The same marketing notions are being applied in today’s business environment—with even less success!
My small business provides professional marketing services to small businesses, and professional and industry associations. I know that a barrier to a successful marketing program is an annual budget for marketing. Many business owners/association executive directors do not understand marketing principles and miss opportunities to develop strategy and carry out tactics—all, that require little cash. Costs associated with personal time and skills development through continuing education, however, can be significant.
In Canada, marketing technology and examples of success are often framed in the strategy and tactics of large transnational corporations and large medium-sized enterprises. Statistics from banks and Statistics Canada, suggest a business landscape of entrepreneurs in need of marketing, that is underserviced by professional marketers. It can be argued that many or most cannot afford or need the exotic marketing tactics and strategy enjoyed by large corporate brands. There is a dire need of affordable, sustainable, and relevant marketing strategy and tactics for small business entrepreneurs that include micro-businesses.
The government of Canada defines a small business as one with 1–99 employees. A medium-sized business has 100-499. Large businesses have more then 500 employees. In Canada, 98.2% of all businesses have fewer than 100 employees. When you add in medium-sized businesses, the percentage rises to 99.8%. Small and medium-sized enterprises (SMEs) are the engine of the economy, and their success is vital to Canada’s prosperity.
 10 things you (probably) didn’t know about Canadian SMEs, Business Development Bank of Canada, https://www.bdc.ca/en/articles-tools/business-strategy-planning/manage-business/pages/10-things-didnt-know-canadian-sme.aspx
Something to consider
- There are 1,152,769 SMEs in Canada (https://www.ic.gc.ca/eic/site/061.nsf/eng/h_03090.html#point1-1)
- In 2012, it was reported that 55% have fewer than 4 employees (https://www.bdc.ca/en/articles-tools/business-strategy-planning/manage-business/pages/10-things-didnt-know-canadian-sme.aspx)
- 9% are medium-sized businesses (https://www.ic.gc.ca/eic/site/061.nsf/eng/h_03090.html#point2-1)
- Small businesses employed approximately 69.7 percent (8.3 million) of private sector workers in 2017 across Canada (https://www.ic.gc.ca/eic/site/061.nsf/eng/h_03090.html#point2-1)
- In the 2002 to 2012, the Business Development Bank of Canada reported that small businesses were responsible for 77.7% of all jobs created in the private sector. Small businesses created around 100,000 jobs each year on average (https://www.bdc.ca/en/articles-tools/business-strategy-planning/manage-business/pages/10-things-didnt-know-canadian-sme.aspx)
Of the average 95,000 businesses created annually from 2010−2015, approximately 85,270 businesses (or 89.8 percent) had 1−4 employees when they were created (https://www.ic.gc.ca/eic/site/061.nsf/eng/h_03090.html#point2-1
According to Innovation, Science & Economic Development Canada statistics, thousands of businesses exit the marketplace every year. Business failure statistics show that about 96% of small businesses that enter the marketplace survive for one full year, 85% survive for three years, and 70% survive for five years (Key Small Business Statistics). Approximately 7,000 businesses go bankrupt every year in Canada. Micro-enterprises (businesses with 1 to 4 employees) have a slightly lower business failure rate than other small businesses. After five years in business, 70.4% of micro-enterprises survived compared with 66.9% of other small businesses (Ibid).
What’s going on?
The statistics speak volumes about the business environment of Canada and the delivery of marketing services. Unless a marketing services business is an enterprise servicing the markets of large medium-sized enterprises and transnationals, any marketing business engaged in providing professional services is likely targeting small businesses whose owners and management have little understanding of marketing strategy and tactics, along with principles, standards and ethics. And of those small businesses, it is likely that micro-businesses with 1-4 employees would be in greatest need of marketing services.
Large medium-sized businesses are likely to have budgeted funds for marketing, staff engaged in marketing and sales, and definitely the target of most product and services suppliers. Competition for work with medium-sized businesses is aggressive, characterized by prequalification documents, open proposal competition and low-fee bidding. These and the larger transnationals tend to follow a bidding process much like that of the public sector.
Microbusinesses, which are almost half of all small businesses, are underserviced and overlooked because they tend to have few or no resources for marketing. It is micro-businesses that need some level of marketing services to survive and grow. With a premium product or service that is needed by customers/consumers, failure within two years of operation might be avoided with a little marketing. The money they have for marketing is channelled toward corporate identity material and a little promotion. Such enterprises simply cannot market their products and services using C21 and 20th century tools offered by most marketing services providers.
Many elements of marketing are changing—like they have through millennia—out of necessity, while the principles, standards and ethics of good marketing remain unchanged. Why are Canadian small businesses being deprived of marketing services that they can afford and apply, that would contribute to their success? Is it because they have limited time to learn relevant marketing skills or afford professional marketing services and implement strategy and tactics that work in today’s business environment? One thing is for certain, cash flow is a factor.
Introducing Mentor Partnerships for small and microbusinesses
Knowing little about marketing, the instincts of a small-business entrepreneur will begin by introducing a product or service they believe people will buy; naming the business; then creating a logo (most believing the latter to be the brand of the company). Business cards and stationery, in digital and hard copy, soon follow. A smartphone with apps for communications, is a necessity; an internet connection for email and search functions; a computer and basic software used for word processing, presentations, and managing data files; a business space; and a bank account. A marketer is rarely engaged in the beginning to lend input into a corporate name, visual identity, and apps for basic marketing activities to help sell something. Marketing is a second thought. Consequently, it may be a last reactionary thought, as the business begins to fail after the second or third year. Two microbusinesses that I started in the 80s failed because I did not market the service when there were strong sales. Marketing activities were an afterthought that came too late.
The challenge to the small-business entrepreneur, is that with few resources, they must sell something and generate a steady cash flow while attracting clients/customers. The challenges to the marketing services provider are how to attract the attention of the small business entrepreneur, convince the entrepreneur that marketing services can help sell the entrepreneur’s products or services, obtain an agreement for marketing services, and generate revenue for the marketing services business, as well as helping the small business entrepreneur sell something. To service Canada’s small business market, the business model for selling marketing services must change, as well as the level of service and means or format to be paid. And we are not talking commission percentage on sales.
Modern marketing-services providers must become skilled at evidence-based risk assessment and behavioural science. To work for a small business with expectations of revenue, requires an assessment of the risks and opportunities of the business to become successful within 24 months. In addition, the small business entrepreneur must be assessed for business acumen, sales skills, and trustworthiness. Can they sell product or service? Do they understand enough about a microbusiness to make it successful with few resources and a lot of intellectual capital? Will the entrepreneur build a trusting business relationship with the marketing services provider and nourish a long-term business relationship? Once the marketer commits, they must fully engage with the microbusiness for at least 2 years!
 Why Small Businesses Fail and How to Avoid Failure, https://www.thebalancesmb.com/why-do-small-businesses-fail-2948582