Establishment size

Philip Morgan

(Readin' time: 1m 30s)

I don't know what y'all think I do for fun, but this is one of those things:


Most verticals are way too large a market for any of y'all to focus on. When I say "verticals" here, I mean broad industry sectors like manufacturing, construction, finance, etc.

They're too large for marketing and expertise reasons. There are too many companies in these broad verticals for you to cultivate a reputation, and there is too much diversity in their needs for you to cultivate deep expertise.

However, your market is never really the entire vertical. If your business is configured to profitably serve huge companies, small companies probably can't afford you. And if your business is configured to profitably serve small companies, huge companies may not take you seriously or might overwhelm your capacity.

So in reality, your market--if you're vertically focused--is the size company you're configured to serve within the vertical you're focused on. Your market is almost always a subset of the vertical. (It's almost always a superset as well, but I won't discuss that today.)

That's why charts like the above, which I made by pulling US Census Bureau data from the American Fact Finder site, are interesting to me. They show how various verticals are "big" or "small" across a range of company sizes as measured by headcount, which is sometimes a good way to measure company size and sometimes is not as good as looking at revenue.

An example: if your business is configured to serve huge companies with more than 1,000 employees, then you will find the Real Estate vertical to be "small" (31 establishments with more than 1,000 employees) and the Manufacturing vertical to be relatively large (886 establishments with more than 1,000 employees). This, despite the fact that when you look at the total population of each vertical, the relationship is reversed. Real Estate is relatively larger (390,500 total establishments) than Manufacturing (291,543 total establishments).