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Small
Business Telecom:
Opportunities in the Women- and
Minority-Owned Small
Business Marketplace
a market research report
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Small companies clearly mean big business for America’s telecommunications and technology suppliers. The availability of sophisticated technology that was previously only affordable in a corporate environment has leveled the playing field between big and small firms. Of the approximate 5.4 million US businesses with employees in 1995, 99.7 percent were small businesses with less than 500 employees.
If small businesses are the heart of the US economy, then women- and minority-owned small businesses are the pulse. Women have been starting their own businesses at a significantly higher rate than men, and by 2005, they will own as many establishments as males. Hispanic female-owned small businesses will outpace all other business segments, growing at the astounding rate of 30 percent over the next five years. To successfully tap this swelling customer base, carriers and vendors need to understand the unique culture of women- or minority-owned small businesses. Women business owners differ from their male counterparts in how they manage, make decisions, select vendors, and utilize credit.
Moreover, technology has given small businesses the power to operate efficiently from virtually any location.
Not only do suppliers have to understand why and when these businesses purchase products and services, but how and where they utilize them. Our research shows that both real and virtual retail channel strategies are needed to reach the work-at-home and mobile small business segments.
Small Business Telecom forecasts the growth of women-owned, minority-owned, work-at-home and solo-entrepreneurial small businesses, comparing their expansion with overall US small businesses. Insight presents small business telecom product and enhanced service expenditures through 2005, and projects the number of small business wireless phones, PCs, fax machines, modems, pagers, and Internet connections in use at these firms.
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Report Excerpt
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Background
May 6th 1999 marked the Third Annual Work at Home Day. In
California, Pacific Bell celebrated the day by partnering
with elected officials and civic organizations to
acknowledge and support the growing work-at-home trend.
In Texas, Southwestern Bell joined forces with elected
officials and local organizations in celebrating and
recognizing one of the hottest employment movements in
the United States: working at home.
The profile of corporate America has changed radically
over the last ten years. Historically, large firms were
the cornerstones of the US economy. Today, literally
millions of people are shifting from traditional
corporate jobs to working in smaller companies or
discovering the rewards and challenges of being their own
boss. Most Americans now work at home or in small
businesses that are responsible for two-thirds of all new
jobs created since the early 1970s.
While the various government agencies and telcos define
small business differently, Insight defines it for the
purpose of this study as any business with less than 100
employees. The US Small Business Association (SBA) varies
the size guidelines for the various industries defined by
the North American Standard Industrial Classification (NASIC) code classification system. Another primary
source of the statistical data used in this report is
information from the US Bureau of Census. Although the US
Bureau of Census does not officially define small
business, they do categorize small businesses by several
terms of reference, which are different from the SBA.
Insight’s research suggests that the total number of
small businesses will grow from 23.9 million in 2000 to
32.3 million by 2005.
The most striking features of the small business culture
in the 1990s may be the number of women leading startups
and the way they are changing entrepreneurship in
America. Statistics alone paint an interesting portrait
of American business:
- In 1992, women owned one-third of all businesses in the
United States.
- In 1999 the number of women-owned businesses
represented almost 40 percent of all businesses,
employing 27.5 million people, and generating over $3.6
trillion in annual sales, according to a 1999 study by
the National Foundation for Women Business Owners (NFWBO).
- The sheer number of women-owned businesses increased
from 7.9 million in 1996 to 9.2 million in 1999, a 16.5
percent increase in that three-year time period.
- Women-owned businesses outstrip overall business
performance in revenue and employment growth, according
to the Department of Commerce, the US Bureau of Census
and the NFWBO.
Based on the growth of women-owned businesses, it becomes
increasingly important for business-to-business marketers
to understand and benefit from these differences.
Women are not the only group starting their own
businesses; African-Americans, Asians and Hispanics are
also starting businesses in record numbers. The Small
Business Administration Office of Advocacy estimated the
number of African-American-owned businesses in 1997 at
880,000, a 126 percent increase since 1987. The same
agency estimated the number of businesses owned by Asians
in 1997 at 1.1 million, a 189-percent increase since
1987. They estimated the number of businesses owned by
Hispanics for the same period at 1.4 million, a 250
percent increase since 1987.
In our study, Insight broke out minority-owned business
within the context of the small business market. We also
looked at women versus men as owners of small businesses.
The Hispanic-owned small business market expanded
dramatically in the 1990s, and Insight estimates that
Hispanic-owned businesses will grow at more than double
that of the Asian-owned small business market over the
next five years. African-Americans will own approximately
one-quarter of the total number of US small businesses in
2000.
Telecom’s Role in the Small Business Marketplace
Many telcos view themselves as partners with small
businesses, helping them become more productive through
the use of telecommunication services and other benefits.
Their offerings aimed at the small business market
include:
- Productivity increases through emerging technologies;
- Bonus discount programs;
- Single simplified billing for bundled services;
- Dedicated sales/support service representatives;
- Rewards and loyalty programs; and
- Bundled and discounted service offers.
Small businesses are increasingly taking advantage of
technology and support services. Personal computers, fax
machines, laser printers, Internet access, scanners,
cellular telephones, and other telecommunication services
provide powerful and inexpensive ways to work
independently, yet stay connected to the world from a
home office, small business, or virtually anywhere. The
common availability of sophisticated technology that was
previously only affordable in a corporate environment has
leveled the playing field between big and small
companies. Technology basically makes the size and
location of an individual’s operation essentially
invisible. Vast amounts of information are accessible at
one’s fingertips and the ability to create virtual
partnerships provides opportunities for competition based
on the quality of work and price. To reach the growing
home-based and work-at-home segments, telcos need to
rethink and revamp both their real and virtual retail
channel strategies.
In 2000, Insight estimates small businesses will spend
$88 billion for telecom products, enhanced services, and
Internet access. That figure will increase to $122
billion by 2005, representing a compound annual growth
rate (CAGR) of 6.8 percent. Enhanced services include
call answering, call waiting, conference calling, call
forwarding, caller ID, 800/900 services, and paging.
Communications companies serving the small business
market must understand and appreciate its complexity.
Even as the small business markets’ importance
increases relative to the general economy, its
composition changes, reflecting back our society’s
changing appearance. The richness of diversity
represented by the small business market will be a
significant revenue opportunity for those companies that
can meet its needs.
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Market Segmentation
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Table of Contents
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Chapter I
EXECUTIVE SUMMARY
1.1 Background
1.2 Women and Minorities Account For the Biggest Jump in
Startup Companies
1.3 The Importance of Small Business
1.4 Telecom's Role in the Small Business Marketplace
1.5 Home-Based Businesses
1.6 Telecommuting
1.7 The Internet
1.8 Conclusions
Chapter II
UNDERSTANDING THE MARKET
2.1 The Shift to Small Business
2.2 Defining the Market
2.3 Market Trends for Small Business
2.3.1 Corporate Downsizing
2.3.2 Balancing Work and Family
2.3.3 Impact of Technology
2.3.4 Small Business and the Economy
2.3.5 Most Small Businesses are Now Home-Based
2.3.6 Generation X Leads the Way in Small Business Starts
2.4 Minority-Owned Small Business
2.4.1 Asian-American Small Business Market
2.5 Women Heading Small Business Start-ups
2.5.1 Profile of the Women Business Owner
2.5.1.1 Women Break Into New Industry Sectors
2.5.1.2 Top Geographic Areas for Women-Owned Firms
2.5.2 Minority Women-Owned Business Characteristics
2.5.2.1 African-American Women Differ from Other Women
2.5.2.2 Growth of Hispanic Women-Owned Businesses
2.5.3 Career Track of Women Entrepreneurs
2.5.4 Support Groups for Women-Owned Small Businesses
Chapter III
TECHNOLOGY AND COMMUNICATIONS REQUIREMENTS
3.1 Needs of the Home-Based Business Market
3.1.1 Key Communication Equipment
3.1.2 Residential versus Business Phone Lines
3.2 How Women Business Owners View Technology
3.2.1 Internet Usage by Women Versus Men-Owned Home-Based
Businesses
3.3 Communications Requirements of Small and Home-Based
Businesses
3.3.1 How Small Business Owners’ View Technology
3.4 The Future of Home-Based Businesses
Chapter IV
PROGRAMS OF LEADING CARRIERS
4.1 Long Distance Carriers
4.1.1 AT&T
4.1.1.1 AT&T Small Business Offers
4.1.1.2 AT&T/Dell Internet Access Offer
4.1.1.3 AT&T's Support of Women in Business
4.1.2 MCI/WorldCom
4.1.2.1 MCI/WorldCom Small Business Offers
4.1.2.2 MCI/WorldCom Internet Offer
4.1.2.3 MCI One Net Savings
4.1.3 Sprint
4.1.3.1 Sprint Online Info Center
4.1.3.2 Sprint Small Business Solutions
4.2 RBOC Programs for Small Business
4.2.1 Ameritech
4.2.1.1 Ameritech Small Business Marketing Support
4.2.1.2 Ameritech Small Business Promotions
4.2.1.3 Ameritech Home Office Marketing Support
4.2.2 Bell Atlantic
4.2.2.1 BA’s Hispanic Marketing Program
4.2.2.2 BA Small Business Services — Voice
4.2.2.3 Voice Messaging
4.2.2.4 Bell Atlantic and Staples
4.2.3 BellSouth
4.2.4 SBC (Pacific Bell, Southwestern Bell, Nevada Bell
and SNET)
4.2.4.1 Pacific Bell
4.2.4.2 Southern New England Telecommunications
Corporation
4.2.4.3 Southwestern Bell
4.2.5 US West
Chapter V
PRIMARY RESEARCH ON SMALL BUSINESS
5.1 Background and Methodology
5.2 Running a Small Business from Home
5.2.1 Younger People are Running Small Businesses
5.2.2 Most Have Younger Children at Home
5.3 The Evolving Workplace
Chapter VI
FUTURE TRENDS IN TECHNOLOGY
6.1 The Growth of High-Speed Access Services
6.1.1 Cable Telephony
6.1.2 Digital Subscriber Line
6.2 High Speed Data Access Providers
6.2.1 US WEST
6.2.2 Bell Atlantic/GTE
6.2.3 SBC
6.2.4 Qwest
6.3 Other Technology
6.3.1 SuperLine
6.3.2 Internet Screenphone
6.3.3 Internet FAX
6.3.4 Further Out on the Horizon
Chapter VII
SMALL BUSINESS MARKET FORECAST
7.1 Introduction
7.2 Overall Small Business Market Forecast
7.2.1 Women-Owned Small Business
7.2.2 Minority-Owned Small Business
7.3 Telecom Technology Forecast
7.3.1 Wired and WirelessTelephones
7.3.2 Information Technology
7.3.3 Enhanced Services
7.4 Telecom Product Expenditures for Small Business
7.4.1 Telecom Product Expenditures for Women-Owned Small
Business
7.4.2 Telecom Expenditures for Minority-Owned Small
Business
Table of Figures
Chapter II
II-1 Growth of US Small Businesses With and Without
Employees, 1995-2000 (Millions)
II-2 Percentage of New Businesses by Category in 1997
II-3 Ages of Entrepreneurs Starting Businesses
II-4 Number of Minority-Owned Businesses, 1987-1997
(Thousands)
II-5 Growth Rate for Minority-Owned Businesses 1987-1999
II-6 Number of Women-Owned US Small Businesses versus All
Other US Small Businesses, 1987-1999 (Millions)
II-7 Number of Women-Owned Firms in the US, 1987-1999
(Millions)
II-8 Number of Employees of Women-Owned Firms, 1987-1999
(Millions)
II-9 Total Sales of Women-Owned Firms ($Trillions)
II-10 Growth in the Number, Employment and Sales of
Women-Owned Firms, 1987-1999
II-11 Percentage of Women-Owned Firms by Business Sector
II-12 Women-owned Small Business by Ethnic Group
II-13 Growth of Minority Women-Owned Business in the US,
1987-1996
Chapter III
III-1 Most Popular Computer-Based Applications for
Home-Based Businesses
III-2 Information Technology Used by Home-Based Small
Business
III-3 Communications Services in the US Home-Based Small
Business
III-4 US Home-Based Business Use of Business verses
Residential Phone Lines
III-5 Reasons Why US Home-Based Businesses Use a
Residential Line for Their Business
III-6 Most Frequent Reasons for US Home-Based Business to
Use a Business Line
III-7 How Technology Helps Business, Women versus Men
III-8 Women Business Owners Planning to Buy or Upgrade
Products and Services, 1999
III-9 Barriers to Obtaining New Technology
III-1 Reasons Why Home-Based Businesses Owners Say They
Will Remain in the Home
Chapter V
V-1 Percent of Households Where there is Some Form of
Work Performed at Home
V-2 The Percentage of Men and Women Running a Small
Business
V-3 Percentage of Households with a Member Running a
Business Inside or Outside the Home, by Age, 2000
V-4 Percentage of Households Running a Small Business by
Presence of Children
V-5 Percent of Households Reporting Work At Home By
Income
Chapter VII
VII-1 Forecast of the Total Number of US Small
Businesses, 2000-2005 (Millions)
VII-2 Number of US Small Businesses With and Without
Employees, 2000-2005, (Millions)
VII-3 Twenty-five Year Trend of US Small Businesses With
and Without Employees, 1980-2005 (Millions)
VII-4 Fortune 500 Share of US Employment, 1970-1995
VII-5 Percent of US Employment in Manufacturing and
Service Sectors, 1950-2010
VII-6 US Small Business Growth by Market Segment,
2000-2005, (Millions)
VII-7 Number of US Small Businesses Located Inside and
Outside the Home, 200-2005 (Millions)
VII-8 Women-Owned Small Business versus Men-Owned Small
Business, 2000-2005 (Milions)
VII-9 Share of Self-Employed Women versus Men, 1963-2005
VII-10 Estimated Number of Caucasian and Minority
Women-Owned US Small Businesses, 2000-2005, (Millions)
VII-12 Estimated Number of Minority-Owned US Small
Businesses 2000-2005 (Millions)
VII-13 Estimated Number of Wired Telephones for US Small
Business, 200-2005 (Millions)
VII-14 Estimated Number of Wireless Telephones for US
Small Buisness, 2000-2005 (Millions)
VII-15 Number of Information Technology Tools for All
Small Businesses in the U.S., 2000-2005 (Millions)
VII-16 Forecast of the Number of PCs For All Small
Businesses in the U.S., 200-2005 (Millions)
VII-17 Forecast of the Number of Modems For Small
Businesses in the US, 2000-2005 (Millions)
VII-18 Estimated Number of Internet Access for US Small
Business, 2000-2005 (Millions)
VII-19 Total Expenditures for US Small Businesses for
Telecom Products, Enhanced Services and Internet Access,
2000-2005 ($Billions)
VII-20 Total Telecom Expenditures For Male- and
Female-Owned Small Businesses, 2000-2005 ($Billions)
VII-21 Telecom Product Expenditures for Minority-Owned
Small Businesses in the US, 2000-2005 ($Billions)
Table of Tables
Chapter II
II-1 Growth of US Small Business Market, 1995-2000
(Millions)
II-2 US Business Starts, 1995-1997
II-3 Home-based US Businesses Starts versus Starts for US
Business Outside the Home, 1997 (Millions)
II-4 SBA General Guidelines on Size Standards for Small
Business in Various Industries
II-5 Characteristics of 1997 Business Starts
II-6 Business Starts by Age of Entrepreneur
II-7 Women-Owned Firms Are Found in All Industries
II-8 Minority Women-Owned US Businesses, 1996
Chapter VI
VI-1 The Cost of High Speed Access
Chapter VII
VII-1 Total Number of Small Business, 2000-2005,
(Millions)
VII-2 Number of US Small Businesses With and Without
Employees, 2000-2005 (Millions)
VII-3 US Small Business Growth by Market Segment,
2000-2005, (Millions)
VII-4 Forecast of Total Number of Men- and Women-Owned US
Small Businesses, 2000-2005 (Millions)
VII-5 Estimated Number of Caucasian and Minority
Women-Owned Businesses, 2000-2005 (Millions)
VII-6 Estimated Number of Minority Women-Owned Small
Businesses in the US by Race/ Ethnicity, 2000-2005
(Thousands)
VII-7 Estimated Number of Minority-Owned US Small
Business, 2000-2005 (Millions)
VII-8 Estimated Number of Wired and Wireless Telephones
for US Small Business, 2000-2005 (Millions)
VII-9 Estimated Number of Information Tools in the US,
2000-2005 (Millions)
VII-10 Total Enhanced Services for US Small Businesses
2000-2005 ($Millions)
VII-11 Total Expenditures for US Small Business for
Telecom Products/Services, Enhanced Services and Internet
Access, 2000-2005 ($Billions)
VII-12 Total Telecom Expenditures For Male- and
Female-Owned Small US Businesses, 2000-2005 ($Billions)
VII-13 Total Telecom Expenditures for Minority-Owned
Businesses in the US, 2000-2005 ($Billions)
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Telecom
Market
Research,
