Buying Decisions for Small Business

Part
01
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Part
01

Small Business Technology Budgets

In the United States, small and medium-sized enterprise (SMEs) dedicate about 15% of their budget to technology. Top technologies on which SMEs spend their technology budget include finance and accounting software (54%), cloud computing (48%), and data and information security (47%).

Common Technologies Purchased by SMEs

Amount Spent

Part
02
of two
Part
02

Small Business Purchase Decisions

Four insights surrounding purchase decisions in US small businesses are 1) that the decision-maker is often the owner; 2) when buying software, they choose price over toolset and security; 3) their buying process cycle is faster; 4) they trust more on recommendations and referrals when making a buying decision.

1. Decision Maker

  • According to Salesforce's Connected Small Businesses report, when it comes to purchasing decisions related to technical equipment, or software, in 72% of small businesses the decision is made by the owner, in 28% by a co-owner or business partner since 83% of small businesses don't have an IT staff.
  • 74% of the small businesses surveyed indicated that they spend at least 15% of their budget buying technology, being the most important factors when making the decision convenience, compatibility with the infrastructure, vendor trust, and scaling the business.
  • Owners make most purchasing decisions in small businesses, whether these are technology or not.

2. Software and Cloud Platform Preference

  • When it comes to the type of cloud software purchased by small businesses, they often prioritize price over toolset and security.
  • According to a survey conducted by Clutch, startups and small businesses prefer business platforms like Google Cloud Platform and Amazon Web Services because of the lower cost, familiarity, and features offered.
  • It is known by marketers that small businesses underinvest in technology, which makes it more important for them to acquire software that covers multiple necessities.

3. Decision Speed

  • Buying cycles and purchasing decisions are quicker in small businesses than in large businesses. They have the advantage of working with more concentrated teams, allowing them to push decisions faster.
  • Usually, if a small business wants to make a purchase and they are already aware of the supplier they want to work with, the process to complete the sale can take between one and two weeks, while large businesses make purchasing decisions based on cycles.

4. Recommendations

  • Small business owners, as single decision makers, know that any buying decision is a great risk for the company, which makes them more skeptical to trust and make big decisions on their own, than larger companies.
  • For this reason, decision-makers in small businesses rely a lot on feedback and recommendations by other owners, peers, and word-of-mouth marketing to consider doing business with a provider.
Sources
Sources