Most young companies dream of getting their first heavyweight customer -- a huge player, central to their industry, like Google Inc. (NASDAQ: GOOG), or better yet, a General Electric (NYSE: GE).
Snaring such a customer can change an entrepreneur's fortunes overnight. Of course. But how do you gain the attention and trust of a large and important company? It's certainly tough -- but there are some strategies to help out.
First of all, make sure you are in a niche that large companies don't consider core to their business, advises Steve Waldis, who is the CEO and founder of Synchronoss Technologies (NASDAQ: SNCR). The company develops software for the telecom industry and even powers the activation for Apple's (NASDAQ: AAPL) iPhone. This was the result of a deep customer relationship with AT&T (NYSE: T).
Chris Cabrera, the founder and CEO of Xactly Corporation (which develops sales software), also knows how to snag big-time customers.
He says that big companies often see working with small companies as a risk. They wonder, will your company be around tomorrow? Can you scale your solution?
To deal with the pushback, a small firm may want to try using new technologies, such as on-demand software. With this, a customer does not have to pay large up-front fees. Instead, there is a monthly or quarterly subscription payment.
Indeed, flexibility in pricing may be what it ultimately takes to get a large company to give you a try. You should consider other things, such as delayed payment terms, pilots, trials, escrows, and even money-back guarantees.
Another way to mitigate the risk is to highlight your expertise. In other words, hire top people who are experts in their fields.
Something else: it's critical to show your commitment and that you'll provide strong support. "Giving out your cell phone number can really drive the message home," said Cabrera.
He also recommends sharing your product road map. "One thing large customers understand is that their size and complexity often makes their needs unique," said Cabrera. "Embrace such challenges and let these customers engage in helping to shape your future product direction."
Finally, you might want to partner with a larger company -- to get the halo-effect from their credibility. But there are risks. "Partnering is always a good idea so long as you can secure that your brand identity is preserved and that you can protect your IP and financial viability," said Michael Gregoire, the CEO of Taleo Corp. (NASDAQ: TLEO).
Tom Taulli is the author of various books, including The Complete M&A Handbook
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Reader Comments (Page 1 of 1)
9-03-2007 @ 8:18AM
Stan Poe & Team~ said...
Our company will be re-reading this article, and we welcome additional insight into [dealing with] large entities. We are currently working to license our patent pending and copyright protected business process to "the right" company in order to grow together! Visit with us today at: http://www.Picture-Yourself-Remembered.com
9-03-2007 @ 9:46AM
Paul Patterson said...
I would like to know what are the next 10 best stocks predictions so I could invest $100.00. that would yeld high in a short period of time. I know it is all a gamble but no risk no gain.
9-03-2007 @ 9:48AM
Paul Patterson said...
I would like to know what are the next 10 best stocks predictions so I could invest $100.00. that would yeld high in a short period of time.
I know it is all a gamble but no risk no gain.
9-03-2007 @ 10:29AM
Hotlanta said...
Advise from SCORE “Counselors to America’s Small Business.” Be wary of taking on a large client until you can afford to lose them. Unless them represent a small part of your overall business, they can spell disaster when they drop you for a competitor who supplies them for a penny less.
More advice fro SCORE? Please go to www.score.org
9-03-2007 @ 10:41AM
Jamie said...
Biotechnology offers explosive growth, just look at companies like Amgen and Genentec. More recently, Imclone that went from the single digits to $85 a share in a short while on the approval of Eurbitux.
An opportunity for a ground floor investment in is Oxigene (OXGN). They are currently the only bio company in phase 3 for anaplastic thyroid cancer. They also have several ongoing trials for other indications and once the approved, there will be many off-label uses.
The stock is currently at a low at $3.22 a share and a 20 bagger is reasonable in 3 years. One note: this is not going to be a short-term investment, but considering the PR and news has never been bad coupled with the fact the stock is at an annual low (always in August), the upside potential is huge when compared to the downside risk.
9-03-2007 @ 10:49AM
Rick said...
Just beware of big crooks like Donald Trump who specialize in impressing small vendors, then eating their assets like a frog eats bugs.
9-03-2007 @ 3:04PM
haveittodayray said...
First, invest in yourself, whether that be by purchasing, books, cds or attending seminars. And never, never give up. "fall down 7 times get up 8" an ole chinese proverb. As to catching a "big fish", use caution, they are out for their bottom line, and most like Trump, will drop you for another company if your not cost competitor any longer. As for stock recommendations, you get what you pay for, always remember that. I would suggest anything from a mining or gas ventures in Colorado, including uranium
mine stock or exploratory companies. The area around Rifle, Grand Junction, Fruita and Gateway, is
starting to explode with the energy exploration and drilling for gas, coal and oil.
RayLanfear
6figuresandmore.com
haveittodayray.com
9-03-2007 @ 5:44PM
futurerest said...
I'd like to see an article for the small business retailer. How about some ideas of how to compete against all the internet and "big box" stores. Many of my friends and I have businesses that employee less than 20 people and we all have the same issue, "not enough customers through the door". Since we don't have million dollar advertising budgets to bring them in, what are some ideas that are working for other "mini" entrepreneurs".
Specialty Sleep Entrepreneur