|FAQ on Marketing
Working Solo, Inc. has worked with dozens
of companies over the last decade to help them connect with
the SOHO market. Here are answers to some of the questions I'm
asked most frequently. -- Terri Lonier
What is SOHO?
SOHO is an acronym that stands for "small office/home
office." The term is nearly 30 years old now, and as
best we can track down, originated with analysts in the
technology industry. It's most commonly confused with lower
Manhattan (SOuth of HOuston
Street) or the neighborhood in London.
SOHO encompasses a range of entrepreneurial activities and
business structures -- from individuals working solo to companies
with 20 or fewer employees. This includes a myriad of worker
categories and terms: home-based businesses, free agents,
independent contractors, telecommuters, e-lancers, and other
The majority of the SOHO market is made up of soloists, however.
If you think of the SOHO market as a large target, the outer
circle would be companies with 12-20 employees. Working from
the outside, the next inner circles would be firms with 6-11
employees and 2-5 employees. The solid center area of the
target is where you'll find the core of SOHO: individuals
who are working solo.
How big is the SOHO market, and where
can I get statistics?
The figures for SOHO vary considerably
-- from between 19.5 and 40 million people -- depending
on how you define the market. For example, some organizations
are interested in workers with a home office, whether they're
employed by a company or on their own. Others organizations
focus on self-employed individuals who are the financial
One of the reasons the statistical data on SOHO is such
a slippery slope is due to the transient nature of self-employment,
as well as the informal quality of many SOHO businesses.
Many soloists don't consider themselves "in business" --
a factor that endangers their business survival and adds
to the complexity of compiling accurate data.
The U.S. Census Bureau tracks the economic impact of SOHO
businesses. They do not use the acronym SOHO, however,
so finding relevant data for your needs admist the reams
of reports they generate each year can be frustrating.
The U.S. Government considers soloists to be "nonemployer
businesses" and they publish a major statistical analysis
every five years. The data is gathered from Internal Revenue
Service (IRS) administrative records of nonemployer
businesses that filed tax returns with a Schedule C, as
well as a selected group of partnerships and corporations.
The most recent
Census Bureau report was published in June 2006 (based on
2004 Census data). This report, Nonemployer
Census Statistics 2004, is available as
a 465-page PDF file that can be accessed at: http://www.census.gov/prod/2006pubs/ns0400a01.pdf.
A few of its summary findings include:
* The US is in the midst of a major boom
* There are 19.5 million Americans
who are self-employed, and their numbers are growing.
2003 and 2004, the number of self-employed grew by 1 million
Overall, these businesses without employees
account for 70% of all US businesses and generate annual
receipts exceeding $887 billion.
Electronic shopping and mail order houses
are among the fastest growing sectors (up 12.7%) for new
Even faster growth can be found
among building finishing contractors (up 22.5%), Internet
service providers (up 18.7%) and nail salons (up 14.7%).
Another important source of research data
on the SOHO market is the US
Small Business Administration. The SBA's
Office of Advocacy is the voice for Small Business
in the US Government and a valuable site for small business
statistics. In particular, its Office
of Economic Research provides
a substantial amount of data on small business, including hotlinks
to recently published governmental reports. The 2007
Report on the Small Business Economy (for Data
Year 2006) runs 368 pages in length. They also host a detailed
FAQ featuring numerous hotlinks for data on Academic
Research on Small Business issues.
For a global picture on entrepreneurship research,
particularly regarding nascent ventures, visit GEM, the Global
Entrepreneurship Monitor. Launched in 1999,
this consortium of researchers publishes annual studies on
entrepreneurial activity. Since its founding, researchers
from more than 60 countries have participated in the GEM
studies. In 2008, they introduced a new Global Report on
Women and Entrepreneurship.
Is there a "typical" SOHO
worker? What are the most common businesses, and the best
businesses to start?
SOHO entrepreneurs are as individual as the businesses they
create. You'll find them everywhere. They sell us food, clothing
or gasoline; they cut our hair, do our taxes, tutor our children,
fix our cars, repair our homes, and much more.
To provide a better understanding of the SOHO market, Working
Solo, Inc. teamed with Bigstep
several years ago to create a Portrait
of Small Business USA. This study offered
a new way of looking at the Small Business universe,
and used underlying business category details to shed
new light on how small firms impact the quality of life
of daily Americans. Lucy Reid, then CEO of Bigstep, analyzed
U.S. Census Bureau statistics in detail. Our goal was
to paint a picture of the SOHO market based on the question: "If
there were only 100 small businesses in the United States,
what would they be?"
Bigstep has posted a pdf
of the Portrait
of Small Business USA as well as highlights
of the study. While this study relies on Census statistics
of a few years ago, it can still provide valuable insights
about the SOHO market.
Most solo businesses are service businesses, because they
require little capitalization to get started and can often
be operated from a home-based setting. With the growth of
technology in the last decade, many SOHO businesses are computer-focused
-- from Web site design to freelance writing to a host of
What's the best way to market to SOHO?
A simple question, with no easy answer.
The SOHO market is
"a mass market of individuals" -- millions of potential
customers, but each is an extremely busy business owner
who is bombarded with marketing messages.
In trying to reach the soloists and small business owners,
it can be helpful to adopt a five-stage approach:
1. Pinpoint your specific objectives.
2. Identify your target market and how their
needs overlap with your product or service.
3. Connect with the SOHO audience in ways
that are most effective for producing your end results. This
may include: direct mail, selective email messages, trade
shows, partnerships with associations, educational training
sessions, and more.
4. Engage the audience: make the offer, close
the sale, capture the data.
5. Retain the connection and build the relationship.
Recognize that there is no single SOHO market. It's
like saying there's a "teenage" market. Yes, small businesses
share many characteristics, but your marketing efforts
must be individualized to your organization's specific
objectives, budget, timeframe, and needs.
with companies seeking to reach the SOHO market, Working
Solo, Inc. acts as a bridge between this broad audience
and companies with products and services that want to reach
them. Working Solo helps companies better understand the
SOHO mindset, including what drives their buying decisions.
Over the past decade Terri Lonier and Working Solo have
worked with some of the world's leading corporations --
you can read more about that here.
SOHOs rely on word-of-mouth
for many purchases. They are often fiscally conservative,
because they don't have a finance department on the 27th
floor to take care of their bills. Reputation, customer
service, and quality are very important factors in SOHO
What are SOHOs biggest concerns?
A Working Solo, Inc. survey of
more than 1200 SOHO workers revealed these top three
fears as small business owners:
1. Not having enough
money to keep the business going
2. Long-term illness of self or key employee
3. Losing customers to a larger company
All three reveal the
challenges of balancing small size with big demands. Maintaining
a sufficient flow of work and cash in the business is a primary
burden for SOHO firms. Many often fall victim to their own
poor billing and collection practices, or delinquent receivables
from larger clients and customers.
Other survey comments showed the depth and range of business
concerns, from "driving my spouse crazy" to "getting
bored and disillusioned." Long-term SOHO workers often
comment that their greatest fear would be to go back to working
for someone else!
What are SOHOs key motivators?
A Working Solo, Inc. survey of 763 SOHO
workers delved into the drivers behind this entrepreneurial
lifestyle. Here's what our research discovered
* Four "Fs" ranked highest as
the main reason to launch a SOHO business: Freedom (30%);
Flexibility (25%); Fun (12%); and Financial rewards (12%).
* Among the biggest misconceptions
voiced by family, friends, and colleagues: that the SOHO worker
has a lot of free time; that s/he doesn't have a "real
job"; and the s/he has enough extra money and doesn't
need to work.
* The one activity SOHO workers would most like to delegate:
Bookkeeping (26%); Marketing/Sales (26%); Tax forms (15%).
* If forced to choose one piece of technology that the could
not live without, they selected: a computer/laptop with Internet
access; a telephone/cell phone; and a fax machine.
What's the best way to gather data on
SOHOs, by their very nature, are not a
traditional demographic, nor are they "joiners."
So there is not a single best way to gather data. However,
if you have a product that requires registration, you can
glean very valuable information about your SOHO customers
-- IF you take the time to carefully design the registration
process. Working Solo has helped companies refine their data
collection process, which translated into a significant competitive
advantage for these firms.
We also conduct email-based questionnaires to our newsletter
subscriber list. (Sorry, the names are not available for rent
or exchange.) Companies often receive more than a thousand
responses within a week to ten days, giving them important
data when designing or refining products.
For further information on the SOHO market, feel free to contact
Copyright 1995-2008 Terri Lonier.
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