Breaking Barriers: The Emergence of Digital SMBs in the Creator Economy 🚀

A Deep Dive into Digital SMBs

Ramesh Ravishankar

and

Srivatsan Venkatesan

May 12, 2023

Hey friends! 👋

Sri and Ramesh here, and guess what?

We have some jaw-dropping news we can't wait to share with you!

Last 30 days, we've experienced a mind-blowing surge in engagement on Twitter, with close to half a million views on our handles, @storcube and @rramesh25! 🚀

It's been an exhilarating ride, and we're beyond grateful for your incredible support.

We can't thank you enough for the overwhelming response to our last blog on the rise of the Creator Economy! 🎉

In case you missed our recent articles, here's a quick referral:

Your support has fueled our passion for digging deeper and bringing you more insights into this ever-evolving creator economy landscape.

Now, let's talk business!

Today, we're focusing on an emerging group of creators transforming the small and medium-sized business (SMB) landscape.

Enter the digital SMBs —the rising stars taking advantage of the work-from-home movement, rapid digital acceleration, and the great resignation of 2020. These innovative entrepreneurs and their businesses are thriving and changing the game for startups, creators, and small business owners.

Picture this: we stumbled upon a captivating individual named Sammy during a chance encounter at a café. There he was, completely immersed in his work, typing away furiously on his laptop. As we started a conversation with him, we discovered he was a computer engineer who worked for a software company during the day. But in his free time, he developed small tools and put them up on the internet.

We chatted and asked Sammy if he would like to join a startup. His response surprised us – he wasn't looking to make much money and wanted to manage his costs from the income he generated. His main goal was to develop a product, give it away, have a few customers, and support them well. We tried to convince him that joining a startup would allow him to pursue his dreams as part of a team, but he was content with what he was doing. He just wanted to focus on creating something he was passionate about.

Sammy's story isn't unique 👉 He's part of a new breed of Digital SMBs.

This new generation of SMBs is characterized by their ability to leverage digital technology to run their businesses and their focus on creating products they're passionate about.

For the next 10 minutes, we’ll dive deeper into this new tribe of creators—Digital SMBs—covering 5 topics.

Remote work 👉 Transforming the job market
Entrepreneurship 👉 The self-funded journey
Digital SMBs 👉 Harnessing technology for business growth
Social Commerce Surge 👉 The unique competitive edge for Creator SMBs
Enterprise Outlook 👉 Identifying Digital SMBs as the emerging long-tail market

Stay tuned, folks. This is going to be an exciting ride!

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Remote work 👉 Transforming the job market

Guess what? Starting a business from your home has never been more achievable. The rise of remote work is reshaping how we do business, offering unparalleled flexibility and the freedom to chase our passions.

The whole work-from-home gig isn't just comfortable; it's revolutionizing how we do business. It's all about flexibility and freedom.
It's not just us talking - 64% of folks who started their companies in the past three years say that the flexibility of remote work was a game changer in their decision-making. That's huge.
Already have a job? No problem. A whopping 35% of entrepreneurs are juggling their start-ups alongside their day jobs, all thanks to the magic of remote work.
And get this —many new companies in 2020 (42%) were started as side hustles. How cool is that?
Remote work has made it easier to start SMBs and opens doors for entrepreneurs to follow their passion without giving up their steady paycheck.

Bottom line? Remote work is where it's at. It's driving SMB growth and more and more entrepreneurs are jumping on the bandwagon to take advantage of its flexibility and convenience. So, what's stopping you?

Entrepreneurship 👉 The self-funded journey

When it comes to chasing dreams, today's entrepreneurs are all in. They're so committed that they're dipping into their pockets to fund their businesses. Just ask Sammy, who didn't think twice before embarking on his self-funded solopreneur journey.

For these dedicated creators, starting a new business isn't about the money—it's about fulfilling personal goals and chasing passions.
Need stats? Here you go: Close to 60% of new SMBs use personal financing to back their business.
And it doesn't stop there. 20% of new SMBs are turning to their personal network—friends and family—for financial support.
Entrepreneurs aren't putting all their eggs in one basket, either. They're smartly leveraging at least two funding sources, from personal financing, friends and family, bank loans, and crowdfunding, to other capital sources.

In short, modern entrepreneurs, especially digital SMB founders, are funding their dreams, and this determination is powering their journey. It's their game, their rules.

Digital SMBs 👉 Harnessing technology for business growth

In the fast-paced, ever-evolving world of social media and digital tools—our diverse new class of creators is making a significant impact. These passionate individuals leverage these dynamic platforms to reach wider audiences—driving growth and sparking innovation within the SMB landscape.

No storefront? No problem. The internet has democratized entrepreneurship, making room for virtual businesses and helping cool ideas reach a global audience.
It's the digital tools that are the secret weapons here. Think payments, AI, and cloud computing that help SMBs operate like the big guys.
And let's not forget social platforms like Instagram and TikTok. They've birthed a new class of entrepreneurs: creators and creatives producing content that resonates worldwide.

Social Commerce Surge 👉 The unique competitive edge for Creator SMBs

In the digital age, becoming a content creator is a breeze.

You're set to share your craft with the world with just a device and an internet connection. Be it videos, blogs, or photographs—the entry barrier is incredibly low, sometimes even free.

The retail industry is experiencing a revolution, thanks to the integration of social media and e-commerce. This fusion is unlocking untapped opportunities for SMBs.

Creator SMBs have a unique edge—they can shape the social commerce ecosystem by using creators, content, and communities to guide consumers toward a shopping mindset.
Deep consumer insights fuel engagement and impulse purchases, key ingredients for a seamless shopping experience in this new marketplace.
Platforms that strike a balance between stakeholders and create compelling, shoppable media experiences are the ones adding real value for Creator SMBs.
The key to success in this space is having enabling capabilities different from what's typically in-house. It’s about making informed decisions on what to build, acquire, or partner with.
Despite some teething troubles, the growth of social commerce in the United States is undeniable. Platforms are continuously enhancing their offerings to ensure seamless shopping experiences.

Let's check out some platform updates:

Pinterest: Their "Shopping List" feature saves shoppable product pins, shows product reviews, and alerts users of price drops.
Instagram: Influencers can live stream product introductions and sales, and tag shopping items in their posts. Brands can create digital catalogs.
TikTok: Shopify merchants can sync product catalogs and set up mini storefronts.
YouTube: Companies can sell products through live streams, videos, or a storefront.
Twitch: Brands can use traditional marketing, creator partnerships, branded stations, and events.
Amazon Live: Brands and creators can live stream product demos and exciting content.
Snapchat: Introduced AR filters or "catalog-powered shopping lenses" for a more experiential purchasing process.
Meta: Tested various social-commerce tools, including a native affiliate marketing program, but pivoted towards its Creator Marketplace.

Clearly, the future of retail is social commerce, and Creator SMBs are leading the charge.

Enterprise Outlook 👉 Identifying Digital SMBs as the emerging long-tail market

Digital SMBs—hobbyists, side hustlers, creators, and entrepreneurs—are shaping a new business frontier.

Using digital technology to create and distribute their products or services, these self-employed mavericks typically work from home and maintain a strong customer bond.

They're a force to be reckoned with in the economy, creating jobs, generating revenue, and driving innovation.

Enterprises must recognize and support these digital SMBs as a distinct business category. Here's what they should consider when catering to these innovative SMBs:

Affordable Pricing: Digital SMBs often operate on shoestring budgets. Therefore, solutions must be affordable, transparent, and devoid of hidden charges. Enterprises can consider offering discounts or budget-friendly options to support these SMBs.
Ease of use: With busy schedules, digital SMBs need user-friendly, intuitive solutions.
Scalability: As these SMBs grow their businesses, they need solutions to evolve alongside them.

There's more to this SMB wave than meets the eye. Over 200 million SMBs are crafting businesses around their passions worldwide. While a few have extensive followings, most are hobbyists and side hustlers—11% are hobbyists, and a whopping 180 million are side-hustlers with 1,000 to 100,000 followers.

Monetizing their passion is a gradual process for many digital SMBs. It takes around six months to earn and about 17 months to make enough to support themselves. By the 25-month mark, many can finally afford to hire their first employee or freelancer.

To attract and foster relationships with digital SMBs, enterprises need to:

Offer Reasonable Pricing: Tailor pricing options to fit smaller budgets, provide discounts, and ensure transparent pricing information to build trust. Here is an example:
Training and Education: Enterprises can help digital SMBs acquire vital business skills by offering marketing, branding, and financial resources and training.
Provide Access to Technology and Resources: Digital SMBs need access to high-quality tech and resources—tools for video editing, graphic design, social media management, stock images, and music.
Offer Marketing and Promotional Support: Enterprises can help digital SMBs reach larger audiences by featuring their content on company websites, and social media channels, or partnering with them on marketing campaigns.

Here are some examples of how enterprises have helped the digital SMBs, especially hobbyists, side hustlers, and creators:

BONUS: Building Community 👉 The Game Changer for Digital SMBs

In the digital age, isolation is a choice, not a predicament.

While running a business single-handedly might seem lonely, today's Digital SMBs are far from alone. The emergence of online platforms like Discord, Substack, Reddit, and Etsy has opened up a realm of possibilities, enabling them to tap into the power of community, share triumphs, learn from setbacks, and grow together.

Here are a few ways how Digital SMBs are sharing their successes and harnessing the power of their community:

Blogging and Podcasting: Embracing the power of storytelling, Digital SMBs share their journeys and expertise, offering valuable insights to their audience.
Joining Online Communities: These networks are fertile grounds for ideation, sharing experiences, and offering mutual support.
Speaking at Events: By sharing their narratives and successes, Digital SMBs capture the attention of potential customers and partners.
Guest Blogging and Article Writing: Reaching out to a broader audience, they establish their expertise and accomplishments in their fields.
Engaging on Social Media: Regular updates about their business, interactions with followers, and joining relevant discussions allow them to share their journey and learn from others.
Giving Back to the Community: By helping other small businesses succeed, Digital SMBs strengthen their community and contribute to a more dynamic business ecosystem.

The power of community is proving to be a game-changer.

By backing each other and sharing growth strategies, Digital SMBs and solopreneurs are achieving more together than they could alone. The story of each Digital SMB is a piece of a larger puzzle - a vibrant picture of collective triumph over individual challenges.

7 Key Takeaways 📚

The creator economy is booming!
Digital SMBs grow with technology.
SMB Digitals—creators, hobbyists, and side hustlers—represent a massive market.
Enterprises should recognize Digital SMBs as the emerging long-tail market.
Affordable tools are vital for SMB Digital creators.
Social commerce provides Creator SMBs with a competitive edge.
Digital SMBs often bootstrap to start.