There’s always excitement when, as a new business, you get an enquiry from an enterprise business. In sales, the slang for this is catching a whale. However, the excitement often turns to dismay when it’s realised that landing the whale is much harder than the initial catch. The whale moves in ways that prevent it being caught. As I briefly mentioned in my article on prequalification, large companies have onerous purchasing and payment processes.
This article explores the relationship between ‘new business’ and established enterprises and how to ease business between both parties.
The Necessity for Collaboration
‘New business’ moves very quickly while established enterprises move slowly. Large companies are optimised for growing profit and optimising existing products and services rather than new innovation. Employee reward structures don’t tend to foster innovation. Slow internal processes thwart any innovation. The easiest way for enterpises to innovate is to partner (or acquire) new business.
Conversely, new business needs quick ongoing sales to stay in business. An enterprise customer not only provides income (on a large scale) but, perhaps just as importantly, provides much needed product validation and kudos.
The Main Problems
When it comes to actually doing business, the quick vs slow becomes a problem. Here are some actual problems I have experienced:
- Enterprises often work by committee. You rarely have to convince just one person. You have to persuade their team, their boss and sometimes the bosses boss. Each will have a hierarchy of different needs and hidden personal aims.
- Large sales trigger requests for information (RFI) or long proposals that can go on for months and force you to do consultancy for free.
- Large companies have ambitious public policies, some of which are the result of government legislation, that impose mirroring policies on suppliers. Areas include health and safety policy, modern slavery, QA policy and anti-bribery.
- Enterprises have professional purchasers that hammer down (pre-agreed) prices, extend payment times as much as possible and insist on fixed pricing into the future.
- International corporations tend to have some supplier requirements that you might not be comfortable with or can’t be achieved. For example, escrow of software, penetration testing of your software and insisting their large purchase doesn’t represent a large proportion of your annual company income.
- Many corporates require suppliers to be registered on some large, old, legacy purchasing system that asks for the same, often irrelevant (or not available), information irrespective if you are a small or large supplier. More than once, we have given up because the effort wasn’t worth the sale. In all cases, the company came back, months later, to purchase a different way.
- Some enterprises insist on having, say, three quotes from different suppliers before they will purchase from you. If you truly have a unique selling proposition (USP) then this will cause a long delay while someone in the enterprise argues the case that you are the one and only possible supplier.
- You will at some time be presented with large NDAs and agreements that can only be analysed by lawyers thus making business untenable.
- Things can move so slow that the main person you are dealing with changes over time such that the requirement eventually goes away. In one case, we dealt with a person tasked with innovation in a large construction company who, himself, became so frustrated with the red tape that he left the company for a more forwarding thinking company!
Plan for Collaboration
Going back to the whale analogy, ‘new business’ needs to assess the demeanour of the whale before deciding to try to catch it. Determine, upfront, through prequalification, what questions you need to ask of an enterprise enquiry. You need to accept that it’s going to be disappointing that not all enterprise leads will be suitable.
Favour working with accelerators, incubators, innovation teams within the enterprise who will be better placed to work quicker (but still not as quick as you would like). If you are actively seeking enterprise sales, seek out these types of innovation groups.
Get your company health and safety policy, modern slavery, QA policy and anti-bribery policies in place so you have these immediately available.
If you are unsure about an enterprise’s intentions then test them with an early purchase for consultancy, a design or a prototype. Avoid doing anything for free. You need proof of ability to pay and require them to have some ‘skin in the game’ so that they are more likely to put effort into the collaboration.
Conversely, if you are an enterprise, set up an accelerator, incubator or innovation team. Anticipate and ease problems such as those I mentioned above. Arrange for special, easy access funding outside of normal enterprise purchase processes. Pre-create quick and easy agreements, if necessary setting up a separate entity to isolate and protect large company process and policy. Don’t forget to promote your innovation groups internally as well as externally through internal to external matchmaking events such as symposiums.
Don’t expect new business <-> enterprise collaboration to be plain sailing. Both sides need to plan upfront how they will deal with one another to avoid blocking problems and ease collaboration.