Small Business Owner Mindset

The three mindsets of small business owners

Small business owners occupy one of three mindsets when engaging with solution providers.

By Steve Waters
Founder / CEO, SMB Intelligence
May 3, 2018

Starting, operating or expanding a small business is an exercise in managing hundreds if not thousands of details, and every owner has limited mental bandwidth with which to do so. Owner mindset refers to where an owner’s priorities and mental bandwidth are currently focused.
Through our experience in the small business ecosystem we have developed a useful model of three mindsets to help organizations more effectively engage with & support owners.


A sourcing mindset occurs when an owner’s priorities and mental bandwidth are focused on sourcing and implementing new solutions. The sourcing mindset is connected to seed and expansion development stage.
Owners of seed stage firms are focused on finding and implementing all of the initial solutions they need to startup and operate. Once a seed stage owner has implemented their initial solutions and launches their firm, they move into an existence development stage, and their mindset shifts from sourcing to operating. Most owners will never be in a sourcing mindset again, unless they move into an expansion development stage.
Owners of expansion stage firms tend to move back into a sourcing mindset as they review their operations to determine if existing solutions support their expansion. While owners are highly unlikely to switch solution providers1, expansion stage is often an inflection point where they will consider adding or switching solutions.
Owners in a sourcing mindset are generally receptive to implementing new solutions, as this is where their priorities and mental bandwidth are currently focused.


An operating mindset occurs when an owner’s priorities and mental bandwidth are focused on day-to-day operations with existing solutions.
Owners are in an operating mindset at every development stage past seed (once the firm is launched and operating). The vast majority of owners are in an operating mindset for the vast majority of their business lifecycle – it is their default mindset.
Owners in an operating mindset are generally unreceptive to implementing new solutions, as they have what they need to operate (even if better solutions exist), and their priorities and mental bandwidth are focused on day-to-day operations.

Breaking point

A breaking point mindset occurs when an owner is in an operating mindset but an existing solution (or lack of one) either stops functioning or becomes too painful to continue, and the owner makes it a priority to solve that pain point.
A breaking point mindset can take place at any development stage once the firm is launched and operating.
Interestingly, owners in a breaking point mindset are generally the most unreceptive to implementing new solutions in general (other than what solves that specific pain point), as their day-to-day operations are likely to be suffering. Mental bandwidth becomes focused on solving this one problem, and solutions that don’t address that issue are likely to be considered a low (or nonexistent) priority.
When owners hit a breaking point, they are most likely to ask their peers for advice2 and/or do an online search.

Why this matters

Identifying firms that are currently at a seed or expansion development stage enables you to proactively engage when owners are likely to be in a sourcing mindset.
Identifying when firms that have hit a specific breaking point is generally quite challenging. Creating an inbound marketing program focused on the breaking points your organization solves provides an opportunity for owners to find you when they reach those breaking points.


1. In a given year for a given category, only 7% of small business owners reported switching their solution provider, and 68% reported never switching. Haque, Naumi. “Small Business Owners Never Switch Suppliers”, CEB, October 28, 2012. Available online. Waters, Steve. “Why the Vast Majority of Small Businesses are Unreceptive to new Solutions”, SMB Intelligence, May 2018. Available online.
2. Small business owners rate peers highest for awareness, second highest (after search) for research, and highest for making a purchase decision. Richards, Stu. “Selling to SMBs via Peers and Influencers”, Bredin, October 2016. Available online. While 62% of owners seek guidance from their industry peers, only 25% seek it from community leaders, 12% from financial advisors and suppliers, and 8% from incubators / accelerators. UPS and Business Insider. “2016 State of Small Business”, 2016. Available online. The top resource small business owners rely on to run their business is “other business owners”, with 66% of owners reporting they rely on them. Shopkeep. “2018 Shopkeep Small Business Pulse”, May 2018. Available online.