Marketing Team Challenges and Solutions on the Journey to SMB Growth

Ravin Nair

Ravin Nair

Fractional CMO

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The following article looks at marketing challenges experienced by SMBs as they progress through stages of growth. It covers solutions to these challenges, traits of winning teams at each stage, and some of the common pitfalls to avoid. Whatever stage your business is at, reading the article will reveal paths to success for taking your business to the next stage. In other words, developing your current marketing capabilities to meet your evolving growth needs.

The insights here are based on the experiences of a wide range of small and medium sized business owners from North America, the United Kingdom, and Australia. We surveyed them about the structure of their marketing in order to answer questions such as:

  • What marketing challenges are most common?
  • What marketing team structure is most effective? 
  • How important are marketing leadership roles? 
  • What’s a realistic marketing investment to see results? 

Respondents were also asked to rate their marketing satisfaction on a scale of one to five, where 1/5 was “very unsatisfied” and 5/5 was “very satisfied”. 

(The survey is still ongoing — click here to take part.)

Stages of SMB business development

The survey results indicated that business owners face different challenges, and need different solutions, at different stages of their development journey. Therefore, we need some definitions for these stages. The simplest way to segment our survey response data was by linking the stages to the respondents’ annual revenue. This resulted in four stages:

1 – Startup (<$1M)

2 – Growth  ($1–5M)

3 – Expansion/Plateau ($5–10M)

4 – Maturity ($10M+)

Each stage will be covered in detail, including the typical marketing structure at each stage and the challenges faced by the business leaders.

Stage 1: Startups

Typical marketing structure overview

These are typically sub-million-dollar businesses, and operations are overwhelmingly owner-driven. The owner or founder is wearing multiple hats, with marketing/business development just one of many responsibilities. The survey data indicates this situation for 71% of respondents. Only 21% of companies at this stage report having what can be described as an internal marketing team, and just 7% have a dedicated marketing leader role.

CEO’s or owners are most likely to lead marketing at the startup stage.

Typical challenges and solutions

At the startup stage, business development is often sink or swim and networking is key. Initiatives tend to focus on areas that are within a business owner’s comfort zone, such as getting first clients and winning referrals. This is time-consuming, on-the-ground work, and because they are doing it all by themselves (in most cases), it’s ad hoc until there are enough resources and revenue to hire new team members to delegate the work to.

As a result, the majority of business owners surveyed at this stage report being unsatisfied with their marketing. (Just 21% rated it 4/5 or better.) Satisfaction is low because they are bearing the burden of growing the business but also can’t realistically afford to hand it off.

Half of respondents at the startup stage feel neutral about their marketing. The remaining 29% rate their marketing 2/5 or worse. Just 21% are satisfied with their marketing.

Of course, with a great product or service, founder-led companies at this stage can succeed with zero marketing, growing just through referrals. But it still takes a huge effort to get the message out there. This is a necessary process that almost all companies go through, but the successful ones grow out of it ASAP. Getting stuck here means wasting a lot of time.

Stage 2: Growth

These tend to be $1M to $5M businesses who are successfully managing the relationship between their revenues and expenses. At this stage, we can assume they have a product or service that is optimized for the market and is selling well. They are satisfying their customers.

Typical marketing structure overview

The owner at this stage is typically delegating multiple responsibilities in order to focus on the strategic vision of the company. The survey data supports this, indicating that solo owner-led marketing falls from 71% of companies in Stage 1 to 39% of companies here in Stage 2.

In the growth stage, CEOs and owners tend to hire someone to lead marketing. In 28% of cases, this person is a Marketing Director.

These delegated responsibilities are usually functions such as accounting, HR, and some kind of combination sales/marketing role. The roles will be filled with leaders and specialists — people who know what they are doing — but processes are not always highly structured and therefore efficiency can be lacking. These functional leaders may begin hiring junior team members to support them.

56% of respondents report having an internal marketing team to support them at this stage.

Focusing only on the combination sales/marketing function, this tends to be heavily reliant on high-performing team members. These people may be primary stakeholders who were at the company from the start and are used to working within the founder’s vision. Everyone is clear on the objectives, and any newcomers are hired to do what the business founder/owner wants.

The data reveals how companies in this stage of growth are transitioning from owner-led marketing to delegating that responsibility to a marketing leader. Thirty-four percent of respondents at this stage have an experienced marketing leader, whether that be a Director of Marketing or a CMO.

Internal team sizes start to increase in this stage, averaging two to three internal members; the largest team had five members. Examples of typical internal team positions and titles include Marketing Manager, Marketing Coordinator, Marketing Assistant, Copywriter, Designer, Content Manager, and CRM Specialist.

Typical challenges and solutions

While the situation appears positive, challenges are numerous. This is demonstrated by the fact that only 40% of business owners at this stage rate satisfaction with their marketing at 4/5 or higher. Even with an internal marketing leader, this figure rises to only 46%. In other words, more than half of these owners are dissatisfied with the growth of their business.

Marketing satisfaction improves at this stage with dedicated leaders and internal teams. However, more than half of respondents still feel neutral or dissatisfied.

So what are the reasons?

Three main challenges were revealed in the data: lack of systems, lack of strategy, and an inability to craft effective messaging.

Systems at this stage tend to be a major challenge, with 44% of survey respondents saying they lacked appropriate software, tools, or processes to empower their marketing and track its results. For example, marketing operations may include a CRM, but it is typically not regularly updated and likely underutilized. And we saw in the preceding section that while the marketing leader may be able to hire a junior team member to support them, strong upskilling systems are usually lacking since the core members “just know” what to do and can direct their subordinates.

Hiring, in general, is a challenge for many companies at this stage of growth due to a lack of budget and/or a lack of expertise: how to hire people, how to know what tasks can be assigned, and how to fire people.

44% of survey respondents say they lack the appropriate software, tools, or processes for marketing at this stage.

Also at 44% was the number of business owners who reported a lack of effective marketing strategy. They want to be able to form a clear vision and make plans that everyone understands and agrees with. However, in general, marketing operations in this stage of growth are still reactive, without well-strategized, iterative marketing campaigns or a way to track outcomes.

44% of respondents at this stage say their marketing lacks vision and a plan that everyone understands and agrees with.

At this stage, owners sometimes mistakenly try to outsource all of their marketing to an agency in the hopes that the agency will both own the strategy and drive its execution. While some high-end, boutique agencies with dedicated strategists may be capable of delivering this all-in-one solution, the costs involved are likely out of reach for most SMBs at this stage.

The typical compromise is to have the SMB own its strategy, and the agency handles execution. Given the average SMB owner’s lack of marketing expertise, this is unrealistic. And without proper strategy, the ability to craft messaging is lost.

Indeed, this was the top-reported challenge in the survey: 50% of business owners at this stage say they struggle to stand apart from their competitors. They feel their marketing fails to accurately communicate who the company is, how they interact, and who their customers really are. This is unfortunate, because at this stage, differentiation in the marketplace is essential.

50% of respondents say they don’t have clear messaging that allows their offering to stand apart from competitors at this stage.

The owner may then consider hiring a marketing leader who will own the strategy, build/train other internal team members, and then be able to get the most out of agencies when it comes to execution. Here, as in the previous stage, we can see the advantage of having an expert lead marketing. Not a generalist, not someone familiar to the business owner who has been there from the start, but someone who brings a fresh perspective and years of experience in recognizing strengths, gaps, and opportunities. This person will be better positioned to craft messaging that targets and connects with the most appropriate customers.

Stage 3: Expansion/Plateau

These tend to be $5M to $10M businesses who have proven that their business model works. The owner may be happy to maintain the recurring revenue, but they might have lost some of the strategic vision to think beyond this stage. There is risk of decline at this stage, and it can be a pivotal period for the long-term success of the business.

Typical marketing structure overview

Owners at this stage have likely delegated most of the marketing functions but are still dictating strategy and determining budgets. They are likely not bringing in enough new people with the new ideas that are necessary to proceed to the $10M+ stage.

Typical challenges and solutions

Comfort might be leading to complacency, which can lead to stagnation. In a sense, an owner at this stage needs to start thinking like a $10M+ business, even if they lack the resources. For example, they need to let go of their leadership over almost everything. This means not simply delegating more tasks but handing over to other leaders — people who are better at each specialization than they are.

This is necessary because specialization becomes more important than ever at this level. Solo marketers or generalists might have previously been adequate, but now, a marketing leader is an absolute necessity.

Therefore, to move up from this stage, business owners need to transition from being 100% central to having multiple leaders and decision-makers. They need to begin hiring new people (or mentoring their existing team members) to take on leadership roles, even if they make a few mistakes along the way.

Furthermore, this is also when businesses need to get serious about budget allocation: A marketing director has to know the budget they are managing in order to plan long term. It can no longer be the owner making discretionary judgment calls every time a need arises.

The survey results were illuminating for businesses of this size. While we saw an increase in marketing satisfaction between Stages 1 and 2, here in Stage 3, satisfaction plummets. Seventy-five percent of business owners are unhappy, rating their marketing satisfaction at just 2/5. This could be because still only 50% report having an internal marketing team at this stage, which is a serious shortcoming for a $10M operation. Similarly, 50% of business owners at this stage say leadership in general is lacking at their companies.

Only 50% report having an internal marketing team at this stage, which may explain why marketing satisfaction is so low

This is due to the fact that, as mentioned above, growing businesses become more specialized, so more leaders are needed for each specialization. Businesses could still get by without teams or leaders in the previous stage, but at the $5–10M stage, it becomes critical. A common knock-on effect of this increasing specialization is the time and effort required to hire the leaders. The existing team members start to feel they are handling too many responsibilities, so general satisfaction levels start to fall.

This is the make it or break it stage. Many businesses linger here, trapped unhappily on a survive-or-die growth plateau. As we’ve seen, going from here to the next stage requires making sometimes uncomfortable decisions: delegating leadership, restructuring, even firing people.

Owners at this stage need to decide what they want to do with their business. They basically have three choices:

  1. Innovate and continue to grow
  2. Sustain their current trajectory (i.e., slow decline)
  3. Exit
 

Focusing only on those who choose the first path of innovation and growth, it is absolutely essential to have specialist leaders making the decisions at this stage. The business owner can no longer be a bottleneck if the business is to scale. Instead, they have to hire competent and capable leaders across most, if not all, areas of the business and be willing to delegate decision-making power to them.

That’s not to say the owner should be denied strategic, make-or-break decisions that could destroy the company. Rather, the leaders they hire should have enough power to make tactical  decisions — the small bets. Importantly, even if the owner does not agree with a decision a leader makes, they must commit and allow them to follow through.

This is an ideal time to consider hiring expert leaders on a part-time basis. These “virtual” or “fractional” (vCFO, fCMO) leaders can bring deep experience in identifying strategies and objectives. And of course, as contractors, they do not carry the risk of expensive bad-fit internal hires. They will also have expertise in hiring leadership roles, including their own role, since most of them ultimately replace themselves with an internal hire once the business has built up enough competence and confidence.

Stage 4: Maturity

This is the final stage covered in the survey results, $10M+ companies. It is safe to assume that SMB owners who make it here have overcome most of the common growth challenges we have seen in the previous stages. This is confirmed by the fact that business owners report much higher marketing satisfaction in this stage, with 83% of respondents rating it 4/5 and the remaining 17% rating it a 5/5. These satisfaction ratings are the complete opposite of the preceding $5–$10M stage.

Respondents at this stage universally report being satisfied with their marketing.

Typical marketing structure overview

From the marketing structure point of view, all of the organizations at this stage have an internal marketing team with one of the Marketing Director/CMO roles described earlier. This expert provides strategy and leads an average of four team members whose roles are technical and/or execution-based. 

Examples of internal marketing team positions and titles include Marketing Manager, Marketing Coordinator, Marketing Assistant, Copywriter, Designer, Content Manager, CRM Specialist, SEO Specialist, Paid Search Specialist, and Appointment Setter. As this list reveals, there is more specialization at this stage that requires more specific skills and expertise. 

This size of team is capable of handling a wide range of marketing and business development functions, so the company is likely reducing the amount of work it outsources. From the budgetary point of view, the business owner is now less timid about spending because systems are in place (such as a well-configured and maintained CRM) that make it much easier to see the impact of the marketing investment.

Typical challenges and solutions

Challenges at this stage are universal: the never-ending struggle to optimize strategy, systems, and training. Customer preferences are always evolving and new competitors are always entering the market. Also, as teams expand, operational challenges and upskilling becomes a priority. The difference here compared to previous stages is that there are simply more resources to draw from, a deeper well of collective experience. 

Another challenge that business owners at this stage of growth report is maintaining their company culture and not straying from the motivations and values that made the company successful from the start.

Budgeting considerations at each stage of growth

Some of the most surprising survey results involved marketing investment. Many business owners report spending far less on their marketing than recommended, and this could be a primary cause of dissatisfaction with their marketing outcomes. The recommended amount of marketing investment varies by industry and the B2B vs. B2C business models, but in general should be in the range of 10–15% of annual revenue.  

INDUSTRY

MARKETING BUDGET

(% OF COMPANY REVENUE)

Banking, finance,

insurance, and real estate

8%

Communications and media

10%

Consumer packaged goods

9%

Healthcare

18%

Manufacturing

13%

Mining and construction

3%

Retail and wholesale

14%

Service consulting

21%

Technology

21%

Source: Marketing Budget: How Much Should Your Team Spend in 2023? [By Industry]

Indeed, less than half (46%) of companies with a marketing budget of less than 15% of revenue reported being satisfied with their marketing results. In most cases, they report aiming for mature growth (10–20%) annual revenue increase. So it can be argued that wanting to achieve higher levels of growth means at the very least trying to aim for industry-recommended marketing budgets

Conclusion

The survey results show that every stage of business growth comes with a unique set of challenges. All business leaders must face them, so it’s important to remember this and know that you aren’t on your own. You have peers who’ve succeeded and failed before you, and their expertise can be your guide. 

The key is to think long term and develop a clear understanding of where you want your business to go. As the key decision-maker, it’s easy to get caught in the daily grind without keeping the bigger picture in view. 

If you are motivated to reach the next stage of growth, you will need to invest accordingly.

For businesses in the $1–$5M and $5–$10M ranges that don’t yet have an experienced marketing leader or the knowledge to build effective marketing, a fractional CMO could be an ideal option.

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Ravin Nair

I help SMBs build and hire their in-house marketing capabilities, implement marketing systems, and transform marketing from an “activity” to a revenue-generating department

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