In a thread posted at many of the forums (yes duplicate posts at different SEM forums) under the title of Why selling SEO is cheating, I used SEO Chat's forum to link to because they are very colorful over there.
Now the thread starter's point is that most small businesses (1) target B2B then (2)target local B2C. In the first case of B2B, he feels that small businesses "are not looking to attract large numbers of Internet users but small, specialized groups of potential clients to their "Venus-Fly Trap"." He explains the "Venus-Fly Trap" as a "marketing tool to develop additional business through online marketing". In the second case of B2C, he argues that "by the very nature that they are small or medium, almost invariably within a restricted geographic area."
I understand this person, and to be honest, most of the leads I get from the SEO marketing side of my business I turn away. But I have landed several large contracts from my SEO efforts. I run a small business that is very focused in a specific niche (custom Web based application development). SEO efforts, for me, is very very cheap. The ROI make extreme sense for my small business and I am sure it makes sense for your small business.
I can see how it can be discouraging for a small service oriented firm. 95% of the leads I retrieve from my SEO efforts are not a perfect match for my company. But there is so much potential for small business B2C efforts. Set up an e-commerce shop and you will see.