Small Business Ecosystem Dynamics

Measuring the digital engagement of prime growth firms

Prime growth firms show a substantially higher adoption of digital business tools than small businesses in general.

Background

Developed by SMB Intelligence in 2018, Prime Growth is a growth-based classification standard for the small business sector. Growth-based classification uses development stage, growth format and growth scale to categorize firms rather than traditional small business segmentation (revenues, company age, company size, and digital engagement). The purpose of the standard is to identify current prime growth firms and segment them by their current growth priorities.
 

What are prime growth firms?

Prime growth firms are independents or small chains, that are employers, with a commercial location(s), that are currently at a seed (new) or expansion (high growth) development stage.
 
They are the small businesses currently most likely to be motivated by growth¹ and receptive to new solutions², and if successful in their current growth plans, to experience substantial growth³ and create new jobs.⁴
 
At any given time only roughly 1% of all small businesses would be defined as prime growth⁵.
 

Digital engagement

We define digital engagement as the use of digital tools for the operation of a small business: website, e-commerce storefront, social media usage, digital advertising, and online directories (Yelp etc.).
 
In this article we are referring to expansion stage prime growth firms only. Seed stage prime growth firms are planning their launch, and as such are often still in the process of establishing their digital presence.
 

Why this matters

Prime growth firms are highly digitally engaged¹⁶, showing higher adoption of websites, e-commerce storefronts, social media usage, digital advertising and online listings than small businesses in general.
 
Small businesses that are highly digitally engaged have nearly four times the revenue growth¹⁷ and are nearly three times as likely to create new jobs¹⁸ than those with low digital engagement. Highly digitally engaged firms are also more likely to be receptive to new solutions¹⁹ and to be motivated by growth²⁰.