Study shows SMEs prefer smaller providers over large corporates

If you’re a start-up or a small service provider – be it of utilities, telecoms, or financial services – you stand a better chance of winning SME business, according to Adaptive Lab.

“SMEs prefer smaller, more empathetic service providers, who know what it’s like,” said the design and innovation consultancy.

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In its SMEs: Smallish Misunderstood Enterprises report, Adaptive Lab revealed what these businesses think about service providers and where their preferences lie. Here are some of the findings, based on a survey of 500 SMEs across the UK and interviews with business owners:    

• 56% of SMEs don’t trust corporations to understand the challenges of running a small business.
• 59% of business owners believe services offered by corporate providers are not tailored to their needs.
• 51% would trust challenger and start-up businesses to provide their services.
• 58% perceive a smaller business as more innovative and agile in developing products.
• 34% expect to switch service providers over the next 12 months.

The report also differentiated SMEs according to ambition and complexity. It stressed that ‘one size fits all’ does not work, especially for these businesses with unique aspirations and needs.

“The fact most banks treat all SMEs as the same is insane,” one business owner was quoted as saying. “Small business is like a thousand different things. SME goes from one person to 300 – it’s not really a capture all, my business is so different to one with 200 people it’s crazy to think that we’re the same.”

Adaptive Lab said more than 60% of the ‘high ambition’ SMEs feel underserved and undervalued by their big service providers, while 55% of ‘mid ambition’ businesses lament feeling small and unimportant.

“Most service providers approach the SME segment as a homogeneous community, ignoring their diversity and unique needs,” said Chris Moisan, principal at Adaptive Lab. “Is the definition of an SME still fit for purpose? The small and medium business sector is a mighty force in our economy.

“The opportunities are huge for any business willing to rethink their approach and reimagine services for SMEs, so we wanted to better understand the issues and scope of possibilities for both sides.”