Business-to-business start-ups are an important segment of the entrepreneurial landscape, but many founders hamstring themselves by focusing on the wrong initial customers. They focus on large enterprises, hoping to gain legitimacy from “anchor” customers. This focus can make their path much more difficult, and dramatically reduce their chance of success. Instead, B2B entrepreneurs should focus their efforts on small businesses.
The traditional line against targeting small businesses is that they’re costly to sell to. That’s short-sighted. Selling to small businesses is a great way to start a business, and often sets the stage for selling to larger enterprises later on. In this way, the start-up that initially served only small businesses can disrupt incumbents and come to dominate the large enterprise market, too.
Because small businesses have similar needs to large businesses, a model that profitably and effectively serves them can be scaled to serve medium and large enterprises with relative ease. Small businesses are also extremely low-risk proving grounds because there are so many of them that failure with any one customer won’t lead to large reputational damage.
Are You running a small business and you think you would rather approach a large business to sell your products and services? What’s Your take on this write up?