Why the Future of SMB-Focused Applications Is Mobile

Although most SMB-focused applications are now web-based, the rising adoption of the smartphone as the de facto dashboard for small business owners will drive a wave of mobile applications customized for them.

“I probably spend four hours a day on my computer, but my smartphone is with me all day,” says Scott Masciello, a general contractor from New York’s Long Island and a Spotfront beta user. Masciello is part of a growing number of small business owners choosing mobile tools over desktop applications to more effectively manage various functions. In a world of “mobile-first” startups, this development may seem trivial, but for companies seeking to build SMB-focused products, the shift points to a subtle but profound trend: the rise of SMB self-service applications.

Web-based self-service consoles have traditionally been the obvious choice for small business applications. They allow for a cost-effective and feature-rich system that scales easily. One weakness, however, is that the user must be willing to invest time navigating and using a foreign console — something that many small business owners are reluctant to do for anything other than mission-critical business tasks. (“Mission critical” usually means activities without which the business would die.)

Many successful SMB-focused digital companies have recognized this hurdle and built dedicated service and support teams to enhance their core self-service product. To manage the tech- adoption issue, these companies join sales and account activation into a single step. An inside sales representative closes the sale over the phone and during the same session activates the account, which typically runs on autopilot, with automated user prompts and reporting. Yet even with these sort of systems in place, SMB user engagement and retention rates for web products remain low and churn rates can regularly hover in the 60% to 70% range.

The emergence of mobile technology as part of the small business tool kit has begun to change all that. For a small business owner, a smartphone offers the following advantages over a computer:

• Portability. This is significant because most local merchants are rarely in front of a computer; they are constantly on the go, managing various aspects of their business.
• Ease of use. Smartphones are generally simpler devices, and small business owners are already trained to navigate applications based on their current use of the devices.
• Familiarity. Simply used as a phone, the smartphone is already the most prevalent and critical SMB tool (relied upon 24/7 for coordination with clients, vendors, employees, and family.
• Affordability. The cost of a smartphone has dropped into the under-$100 range, allowing for even more widespread adoption compared with desktop devices, which still run in the $400 to $1,000 range.

In part because of these attributes, many SMBs are now using self-service mobile applications in a meaningful way at scale and demanding more from their smartphones to support such activities. Consider the following:

• Eighty-five percent of small business owners already use smartphones for their enterprises, more than double the level five years ago, according to the AT&T Small Business Technology Poll 2012
• Seventy-four percent of small business owners say that mobile technology is important to the future success of their operations, according to a Bank of the West survey.
• About 3 out of 5 small business owners say mobile technology is more effective than other tools at performing certain functions.
• And 3 out of 5 small business owners say they wish mobile technologies were more relevant to their enterprises and that this is the biggest barrier to their adopting mobile tech for their companies.

So how are SMBs now using this new mobile tool kit for their operations? A few functions have undergone a wave of innovation over the past few years:

• Payments and transactions. This area is low-hanging fruit, especially with the complexity and cost of previous payment and POS systems. It will be interesting to see how vendors evolve as they begin to integrate marketing and back-office services into these applications.
• Inventory and supply. Increasingly, big-box retailers are recognizing SMBs represent a significant customer base and are building out customized and useful applications to let such companies better research, purchase, and use their products.
• Employee management. For any small employer, managing a team of employees requires constant communication and project management. A number of apps have popped up to help support these sorts of relationships.
• Scheduling and booking. Mobile and tablet technology has already had a major impact, particularly for high-volume transaction businesses like restaurants.

Despite this steady traction and adoption, there are a number of obvious areas for expansion, including the following:

• Marketing and sales. This opportunity has to do with efficiency and speed. SMBs need tools that will allow them to quickly set up and run hyper-targeted (and effective) marketing campaigns, supported by real-time collateral from their business (photos and text). Even mainstream advertising companies such as Facebook and Google have realized this and developed mobile versions of their ad products to let SMBs build and manage campaigns on the fly.
• Specialized utility tools. Mobile apps are changing the medical industry with focused applications designed to assist and automate particular tasks. SMBs also need specialized applications to improve not just the management of their operations but also the business functions themselves. I haven’t seen a lot of these applications, and they certainly aren’t the “sexy” apps loved by the press, but they can have a lasting utility within certain segments. I suspect we’ll see a lot from this category.
• Back-office operations. Certain back-office tasks such as bookkeeping and accounting require fairly complex systems that have not yet been effectively developed for mobile. There is huge potential, however, for the integration of these systems (including those for basic sales and processing) with the mobile devices used by employees and customers to create  real-time pictures of small businesses’ health and identify possible growth opportunities.

This said, the challenges to a comprehensive SMB mobile tool kit abound. The classic limits of the small screen still exist; smartphones continue to struggle to support certain feature-rich applications as well as their desktop competitors do. This can be challenging when it comes to applications that require more complex user engagement for the setting up and managing of programs (such as analytics suites and campaign management tools). There’s also a mental hurdle to overcome before a SMB — or a mobile user in general — becomes comfortable with conducting transactions involving significant amounts of money via mobile applications; this will ultimately be necessary to drive development in this space. And economical SMB product distribution and sales remain another key barrier that very few have effectively resolved for the web, let alone mobile.

With these things in mind, those building SMB products would be well-served by developing concepts for mobile versions sooner rather than later.

Alex Sherman is the cofounder of Spotfront, a mobile startup that makes online marketing simple for small businesses. Previously he was a product manager at MediaMath, an advertising technology company. Follow his blog at thefirstpart.com.