As part of the ritual of examining local commerce and SMB SaaS strategies, Localogy goes right to the source: SMBs themselves. After examining the types of vendors with which SMBs consolodate SaaS, we switch gears to look at retirement planning. What succession plans are SMBs considering?
Localogy’s Modern Commerce Monitor (MCM) answers these and other questions across the SMB SaaS product set, which we preview in this Benchmark Bytes series.
Data Dive
– Starting at a high level, 53 percent of SMBs have put some thought into their succession plans.
– Among those, there’s a mixed bag of the types of succession plans being considered.
– The most prevalent plan (36 percent) among SMB respondents is to turn the business over to a family member.
– That’s followed by plans to simply close the business permanently (21 percent).
– Meanwhile, 18 percent of SMB respondents say that they plan to modernize the business, with the primary intention of boosting its value before selling it.
– 15 percent likewise plan to sell the business… but without doing any upgrades.
– Lastly, 9 percent are unsure about what route they’ll take.
– Altogether, these results aren’t terribly surprising, but it’s notable how family succession was by far the most popular choice.
– This generational turnover is usually a good thing for the broader SMB Saas sector because younger generations tend to be digital natives that are more open to upgrading legacy systems and working with SMB Saas vendors.
– Not only is new management a bit more digitally savvy, but the passing of the torch is generally an opportune time to start to integrate new software tools to run all aspects of the business.
– Even in other cases, such as SMBs that want to modernize capabilities before selling, it’s a good opportunity for SMB SaaS vendors to scratch that itch.
– And for those SMBs who will simply close the business and walk away, a demand gap will likely be filled by another – potentially younger/savvier business – to sprout in its place.
– Like the above outcomes, this could be favorable to SMB SaaS vendors to meet demand for SMB operational management…everything from marketing to payroll to scheduling to HR.
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Long-Tail Opportunity
Stepping back, SMB online marketing – as well as operational and fintech tools – continues to grow rapidly. SMB SaaS startups and online service providers are correspondingly thriving as it continues to grow as a leading subsector of the broader SaaS universe. There’s a long-tail opportunity at play.
Meanwhile, new SMB SaaS users could represent permanent adopters – a concept that accelerated in the Covid era as SMBs were forced into digital transformation. This sent them into the arms of SaaS providers (where many have stayed) to accomplish a range of marketing and operational functions.
We’ll return in the next installment to go deeper into Localogy original survey research. That will include SMB goals and success factors. Let us know what additional insights jump out at you from the above data, and stay tuned for more breakdowns in our Benchmark Bytes series.
And stay tuned for the latest Wave of MCM, which will be out shortly, with highlights that will be presented for the first time at Localogy’s upcoming L24 conference. We hope to see you there…
