We are asked by our SEO reseller partners all the time: "Does SEO work for every business?" And the answer is NO. There are just some things in life that you will not turn to a search engine to find. As you think this through a bit, you'll realize that common sense offers a lending hand as you think about who can really benefit from SEO and who can't.
For example, when you need a 6-pack of beer, do you walk over to your computer and type in "Rochester beer" (I work out of our Rochester office). No. You really don't. And as far as a know, the stats from Google would support the idea that search volume is very low for beer.
But when you need a plumber, veterinarian, auto glass repair, roofer, driveway paver, fence company, or general contractor - I'll bet I know where you turn. It isn't the yellow pages anymore. The use of the yellow pages has been on a steady decline over the last 10 years and the numbers out for for Q1 2010 show a continued decline.
So while SEO may not be the be-all-end-all for every single business, it is a very potent marketing tool for about 75% of them. And if you factor in the decline of yellow pages usage, it all fits together. The very same categories of businesses that did well with yellow page advertising are finding search engine paid advertising and SEO really works for them also...