Do you believe your business is too small to work with bigger ones?
Sure, some of them are afraid you'll go belly up tomorrow or get acquired. But especially in these fast-paced times, many large corporations just want to work with the right products, services, and talent to achieve their goals.
For example, Dublin-based startup Boxever helps major airlines, banks, utilities and other larger companies leverage customer data to offer a more personalized experience for their customers. CEO Dave O'Flanagan said, "What I've learned is that these big organizations with global operations are all willing to work with a niche Irish company that really understands their challenges."
Why are bigger enterprises eager to work with smaller ones - now more than ever? Here are two main reasons and how your company can better appeal to them.
Big companies can't do what you do.
Many large organizations cannot innovate easily. It's difficult to rebuild, upgrade or add on to a 747 in mid-flight. Their cultures preserve bureaucracies and processes to get things done at scale.
Another factor, according to technology industry analyst Rob Enderle of the Enderle Group, is that huge companies do not always support creative thinkers:
"They become the nail that the rest of the firm pounds on until they either conform, die or quit. Largely, they are forced to fit inside the visions of someone else, and I think that is why most large firms have to acquire much of their innovative technology after a while."
Thus, big corporations often acquire startups, have their own venture capital units, and/or create accelerators and incubators that are separate from their core businesses. Even then, many cannot match the ingenuity of startups and SMBs.
"Really big organizations are struggling with innovation and the ability to transform their business to focus more on the customer," said O'Flanagan. "It can be difficult and expensive for these organizations to develop and maintain the kind of capability that Boxever has built."
Big companies are looking for an edge.
Indeed, there is great pressure on large corporations to deliver viable products and services to the market faster than ever. The "Accenture Technology Vision 2017" report revealed that 86 percent of executives said they "must innovate at an increasingly rapid pace just to keep a competitive advantage." In the 2017 Fortune 500 CEO survey, 73 percent listed the rapid pace of technology change as their number one challenge.
"As digital becomes more prevalent, organizations need to move faster and work with agile partners," said O'Flanagan. "They are looking to smaller, more nimble companies with a credible product and value proposition like us to help them achieve outside goals and accelerate their mission."
In fact, a MassChallenge and Imaginatik report - "The State of Startup/Corporate Collaboration" - found that 82 percent of large corporations see interactions with startups as "somewhat important" to "very important." In addition, 23 percent said that these relationships are "mission critical."
How to Increase Your Chances of Selling to Goliath
Since these giants are amenable to working with small businesses, here are two things you can do to increase your chances of making a sale or even getting acquired.
1. Build a world-class organization.
As you start earning revenue as a startup or small business, you must move beyond a core focus on product development to maturing all areas of the business. Companies that are world-class in one area but ignore the others risk losing deals with bigger organizations, including acquirers who care about all areas of your business.
Think about how many parts of your organization must work with a potential customer during the sales process and then post-sale. Because of this, CEOs and executives must ensure that every department functions at a world-class level. This requires identifying the key processes in each function of the business and then systematically improving each one.
2. Respect culture and exude professionalism.
It is also important to understand and respect the cultures of large organizations if you want to sell to them. They will expect a certain level of professionalism in every interaction with your company. Corporations listed "strategic fit" - defined to include cultural fit and interpersonal relationships - as the top factor in working with startups in "The State of Startup/Corporate Collaboration" study.
This is critical, because it is often easier for people to evaluate HOW you do something than to evaluate WHAT you do. The old saying that any sufficiently advanced technology is indistinguishable from magic applies. Many startups think the customer is evaluating the technology or service, which is often very difficult, while they are really evaluating the people selling it.
Their perceptions matter in areas as diverse as the way you dress or the type of contracts expected. You must be able to handle these cultural differences across your whole organization. If your people walk into a major bank headquarters in jeans and a t-shirt or send a quote that looks like it came straight out of QuickBooks, your chances of making a deal just went down by 50 percent per interaction.
When it comes to "strategic fit," be open to working with these corporations in different ways, such as being part of their incubator or accelerator programs. However, be judicious about this to ensure they aren't just trying to learn from you for free, which has been known to happen. In their report, MassChallenge and Imaginatik recommend determining quickly if there is budget or not, so you can manage the relationship accordingly.
"The world is flat and the Internet brings us a lot closer together," concluded O'Flanagan. "Big companies look for access to the best talent and vendors regardless of location. Don't be afraid to go further afield to work with bigger organizations or any organization."