What defines a small business? What defines some of the characteristics of a small business and project management?  The list below is a good start, but by no means exhaustive. 

• Low overhead
• Everyone has multiple roles
• Usually good collaboration and coordination
• Little to no IT support
• Limited budget
• Applications need to be easy to use and meet a clear need quickly
• May have multiple projects with the same people playing different roles
• Need to link documents and other objects to a secure project space
• Most interactions still done by e-mail
• Integration of mobile computing into the project mix
• Often as contractors, have to deal with project management tools of large companies
• Low start-up costs, and a free trial period
• Inexpensive online storage
• Easy administration, i.e. can grant access to the project space with 2 clicks and one e-mail
• Don't need complex dashboards or reporting tools, they know what is going on
• Task management is key and is low overhead
• Team calendar to help with coordination, should integrate with PIM
• Able to import and export from MS Project easily
• Some level of customization for each project space

The hallmark of a small business owner is their flexibility, ability to keep many balls in the air at the same time, their sensitivity to cost, and usually a total lack of IT support. Small businesses have as much need for project management tools as a medium or large business, but they need these tools to be tailored to the way they work, not a cut-down version of an enterprise project management system, or a new licensing arrangement (as Microsoft has done).

Sales

It is difficult for many software vendors to sell to small business. Yes there are over 5 million in the U.S. alone, but the sales are usually small, and may be only a few projects or involve a few people, and so the overall revenues from each sale are small.  But taken as an aggregation, these sales or subscriptions can add up to a good revenue stream for a software vendor. Imagine having a million people on your project management service, each paying $10/mo. That is $10 million each month or $120 Million a year. The problem here is cost of sales and support. If you need to interject the cost of a person into one or both of these processes, your profit margin takes a nose dive.

In general SaaS options for small business project management seem to work best. There is low start-up cost, no infrastructure required for the small business and the vendor essentially acts as IT support. A free trial period of 30 days or more can allow the small business to create one or two projects and have everyone in the business get a chance to use the system.  But even after the 30 day free trial, the small business does not have to make a big commitment.  If they are willing to buy a year's worth of subscriptions for X # of people, then maybe they get one month free. But they can also use the service on a month-to-month basis. This flexibility allows the small business to feel secure.

The other issues that contribute to their security is knowing their project spaces are secure, that it is easy to add members to a project team, and that their information is not captive to the service, i.e. if they decide not to continue with the service it is easy to export project information.

The other critical issue is support. Having great support is essential because the small business owner rarely has an IT resource to turn to.  The buck stops on the owner's desk and the last thing he/she wants to do is deal with a software problem, they need to stay focused on their business.  One idea is not only to have great support, but to create an online community of users that can be the first line of support (and is also great for product feature requests and feedback). Not only does this help to capture critical knowledge and save the vendor in support costs, but it also creates loyalty, and can cut the "churn" rate on subscriptions significantly.

Overhead

Small businesses are wary of additional overhead.  If everyone is not contributing to the bottom line (in some way) they are considered overhead, and a small business can get dragged under by too much overhead.  For this reason the project management service needs to be inexpensive, easy to use (so almost no additional training costs) and meets most business needs without exceeding them. By this I mean don't provide advanced project management functions like reporting, resource management, work breakdown structures, etc.  Most small businesses don't need to report to anyone, and don't need the advanced features. Task management is probably enough, most of the time they don't need a Gantt chart, but just have tasks connected to a team calendar for the project so everyone can coordinate and track progress.

Ease-of-use

It is important to trade additional functionality for ease-of-use. In all of our surveys, ease-of-use is rated higher than any specific function. Engineers and software designers often believe bigger is better, and have something like an "arms race" for features, with the winner having the biggest check list of features and functions. This may work well for a large enterprise or the government, but it does not work for a small business.

How quickly the software can be learned and how quickly a project can be created and customized is probably the single most critical feature in the acceptance of this kind of software by small businesses. If it takes too long to get information into the project space, or to add another team members, notify team members, and coordinate with other team members it will not happen, and the software loses much of its value. Remember the software has value because it supports behavioral norms amongst project team members.

Price

Small businesses are very price sensitive.  But even they can afford $10/month/person or project, without having to worry they are breaking the bank. If the project management software or service proves to be invaluable in running the business, then they might be willing to pay a bit more for its use. This is where premium pricing comes in, giving these businesses access to specific project or process templates. Adding more sophisticated features through premium pricing is one way to go, but it is important to add features that small business need for projects, and not to fall back on functions being offered to large businesses, most of the time these will not fly, and that effort is for naught. Premium services takes some real thought about what can enhance the project process for small businesses. Maybe it is the ability to mash-up data from inside or outside the organization with a project plan or import into a secure project space.  Maybe it is specific industry or process templates?  But it is not reporting or other aspects of complexity that the small business does not want or need.

Conclusion

For all of the reasons listed above, we believe that smaller vendors in the project management space will serve small businesses better, because of flexibility, pricing, delivery model, and providing core features without much overhead. In order to make sure you find the right project management product or service I have included the checklist below:

1. Is there a real need for this type of product or service in your company?
2. Have you defined what features you need for a solution and prioritized them?
3. Do you need to include people from other organizations in projects?
4. Is email integration critical for you to get team adoption?
5. Is it a product or service?
6. Is it task management or much more?
7. Is it low cost, and offers a monthly subscription plan?
8. Is there a low start-up cost (or a free trial)?
9. Are there any user forums online where they talk about service and support?
10. Is it easy to use (you can get proficient in less than an hour)?
11. Does it require any resources to get started?
12. How easy is it to import and export data?
13. Does it offer enough online storage, or more storage at a reasonable price?
14. Is there a migration path?
15. Do they offer templates (especially if you are doing recurring projects) or premium services?