Businesses with fewer than 100 employees account for 98 percent of all companies in the United States, roughly two-thirds of the country’s jobs, and one-third of its gross national product. They also make up a significant part of the action in many industries: half of the turnover in the travel industry, for example, and one-third in the telecom-munications industry, worth $80 billion and $57 billion, respectively.

In other words, small business is big business—above all, because small companies can often be targeted, profitably served, and retained without the discounting that large corporations demand. A transportation company found that its biggest accounts were earning a sorry 2 percent before taxes, as opposed to 10 percent for a standard small account. The disparity was explained chiefly by the high level of discounts offered to large customers (an average of 18 percent for "strategic" companies) as against 1 percent for their smaller counterparts. The better pricing structure more than offset the higher cost of serving small customers.

Merrill Lynch realized the potential of small (and medium-sized) businesses in the early 1980s, when it created a division to focus on their needs. Other companies too are realizing that serving this market effectively is...