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.


By Steve Waters
Founder / CEO, SMB Intelligence
May 12, 2018


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.
 

Websites
97% of prime growth firms have a website6,, while only 55% of all small businesses do7.
 
E-commerce storefront
23% of prime growth firms have an e-commerce storefront8, while only 13% of all small businesses do9.
 
Social media
99% of prime growth firms use social media10, while only 76% of all small businesses do11.
 
Digital advertising
28% of prime growth firms use digital advertising12, while only 19% of all small businesses do13.
 
Online listings
67% of prime growth firms have claimed their Yelp listing14, while only 33% of all small businesses do15.
 

 

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.
 
 


 

References
 
1. Waters, Steve. “Most Small Business Owners are Motivated by Lifestyle – Not Growth”, SMB Intelligence, May 2018. Available online.
 
2. Waters, Steve. “Identifying the Small Businesses Most Receptive to New Solutions”, SMB Intelligence, May 2018. Available online
 
3. Waters, Steve. “Which Firms are Most Likely to Experience Substantial Growth”, SMB Intelligence, May 2018. Available online.
 
4. Waters, Steve. “These Firms are the Engine of Small Business Job Creation”, SMB Intelligence, May 2018. Available online.
 
5. Waters, Steve. “Quantifying Prime Growth Firms”, SMB Intelligence, May 2018. Available online.
 
6, 8, 10, 12, 14, 16. SMB Intelligence, “Prime Growth Briefing – 2017 Q4”, December 2017.
 
7. CNBC / Survey Monkey. “CNBC / Survey Monkey Small Business Survey”, June 2017. Available online.
 
9. Calculations by author based on data from CNBC / Survey Monkey and Small Business Trends. “CNBC / Survey Monkey Small Business Survey”, June 2017. Available online. Mansfield, Matt. “E-Commerce Statistics for Small Business”, Small Business Trends, November 2017. Available online.
 
11. Clutch. “Social Media for Small Business: 2017 Survey”, March 2017. Available online.
 
13. CNBC / Survey Monkey. “CNBC / Survey Monkey Small Business Survey”, June 2017. Available online.
 
15. This figure refers to local retailers which we are using as a proxy for small businesses. Brandmuscle. “State of Local Marketing”, 2017. Available online
 
17, 18. Collins, George and John O’Mahony and Sara Ma. “Connected Small Business US”, Deloitte, 2017. Available online.
 
19. Waters, Steve. “Identifying the Small Businesses Most Receptive to New Solutions”, SMB Intelligence, May 2018. Available online
 
20. Waters, Steve. “Most Small Business Owners are Motivated by Lifestyle, Not Growth”, SMB Intelligence, May 2018. Available online.