Expand Your Sales By Serving The SOHO Sector

    November 20, 2003

The small office/home office (SOHO) market is the fastest-growing business sector in the country. Its population has been estimated at more than 25 million businesses, with that number expected to rise to more than 32 million by the end of 2003. The SOHO market’s purchasing power already tops $100 billion per year.

No doubt, SOHO is a boomtown. How can you sell your wares here? You’d be wise to listen to what Terri Lonier, founder of Working Solo, and Jeff Zbar, founder of Chief Home Officer, have to say.

“Show them effectively that you are a partner in their success, and they will be incredibly loyal. They will have very positive feelings about you and your company,” says Lonier, whose Working Solo company functions as a clearinghouse for SOHO entrepreneurs and the businesses that want to sell to them.

Who, what and where is SOHO?

Entrepreneurs and others in the SOHO market form a group as diverse as America itself. About half are female, half male. Some are pausing in SOHO before entering or returning to the traditional workforce; others have chosen SOHO for life. SOHOs pursue a dazzling variety of activities, from high tech to handicrafts, and more than half are doing it from home.

SOHO practitioners adopt a variety of business models. Some are independent professionals who choose self-employment but draw the line at employing others. Some are founded with the intention of staying small. Others shoot for fast growth right from the start, inhabiting SOHO for only a short time before breaking out with an initial public offering or moving the enterprise to more traditional office space.

SOHOs can even include teleworkers (also known as telecommuters), those corporate employees whose employers allow them to work from home at least three days each month. Many work at home even more frequently than that, says Zbar, whose company is a small-office consultancy, and who is the author of several books on small business and teleworking. Many of the 28 million American teleworkers purchase their own furniture, computers and supplies – making them another lucrative target for marketers reaching out to SOHOs.

What does a SOHO need?

Whether they’re entrepreneurs or teleworkers, SOHO needs all the products and services larger businesses need, from paper clips to computer systems to back-office support. “It’s been interesting to track SOHO growth. I’ve seen a lot of growth is in the business-to-business services area,” Lonier says. “As new small businesses start, they need services such as public relations firms, Web design firms, graphic designers, attorneys, accountants, bookkeepers – a lot of these are small businesses. We’re seeing an upward spiral of economic growth as more small businesses need small businesses.”

Businesses that plan to stay small have different needs from businesses intent on scaling up. And yet, Lonier acknowledges, the division is a fuzzy one. “Often, they themselves don’t know. Some are clear from the very beginning: ‘I want to build a business that’s going to scale to 150 people in two years.’ Other people say, ‘I just want to have a catering company.’ And all of a sudden their hot sauce takes off. People are coming around saying, ‘Why don’t you franchise this?’ It’s an interesting part of the SOHO mindset.”

One of the key advantages of SOHO business is flexibility. A SOHO can grow, shrink, relocate, or refocus rapidly in response to challenges and opportunities. Some SOHOs stay small to avoid the hassles associated with traditional businesses, such as staffing, payroll and benefits, but are still able to quickly respond to market forces, Zbar says.

That makes it a real challenge to categorize SOHOs. If you target this market, you must be just as flexible, anticipating trends and shifting directions as the market changes. Stay in close contact with your SOHO customers. They will always have needs, but these may change dramatically from one month to the next.

Marketing to SOHO

“The challenge in selling to SOHO is finding these people,” Lonier says. “Many times, they don’t realize they’re a business. You ask them and they say, ‘No, I’m a caterer, I’m a Web designer, I’m a jeweler.'”

Moreover, those who identify themselves as business owners might not define themselves by their places of business, adds Zbar. As an acronym, SOHO itself has never caught on among the masses.

Finding SOHOs is a challenge, and so is making the sale. SOHOs are extremely loyal to the vendors who solve their problems, but each purchase is tough. “They make buying decisions as a business, but with a consumer outlook. They’re writing checks essentially out of their own pockets. Each purchase is very much a reasoned choice,” Lonier says. She points out that to succeed with SOHOs, you must convince them of the benefits they will gain from your offering: “The positioning of being a partner to help SOHOs succeed is essential. Be a partner in their success.”

“Time really matters to SOHOs,” she adds. “Money is a driver, but more and more, they’re realizing that time matters more than money. If it’s a little more expensive, but it will save them time, they’ll make the leap.”

Another driver is ease of use. SOHOs seek solutions, not details – they realize the importance of staying focused on their income-generating activities. “It’s directly tied into time,” Lonier says. “They don’t have time to read manuals, or figure out complex technology.”

Save them time, and help them work smarter – not harder – and you will earn the position of trusted partner to your SOHO customers. Why is this important? Because SOHOs talk to and network with other SOHOs. Marketers who win their loyalty also will win their referrals to other SOHOs, and word-of-mouth is an effective benefit resulting from SOHO acceptance, Zbar says.

What’s the catch?

“SOHOs can be very customer-service demanding, which can be very challenging if you’re a SOHO with limited resources,” Lonier says. “You have to deliver complete solutions that are not going to drag you into, for example, giving away free consulting advice.”

Because so many SOHOs are startup businesses, they’re going to look for a guiding hand for many aspects of their operation. Once a SOHO business owner trusts you, you may find that owner turning to you for all kinds of advice. To succeed with SOHOs, strategically limit the time you spend supporting customers after a sale.

On the horizon

Lonier and Zbar see a bright prospect for SOHOs and the businesses that market to them. Targeting SOHOs may be a rewarding strategy for your business. In SOHO, you’ll find a large and loyal market if you offer solutions that contribute to their success. However, you must avoid raising customer-service expectations beyond your means to deliver.

Save SOHOs time, make them more productive, and you will become valued partners in each others’ success.

Sarah White consults on marketing and advertising through Third Wave Research, a provider of demographic tools and information for marketing and strategic planning. http://www.thirdwaveresearch.com Sarah White is the author of several books of business advice, including the newly-revised “Complete Idiot’s Guide to Marketing”.