Most people are interested in the Business to Customer (B2C) segment when starting up. However, the Business to Business (B2B) segment is also a big share that more people fail to consider. When starting a business, you should carefully consider all aspects of both B2C and B2B before deciding on a business model.
Why is it imperative to evaluate both B2C and B2B before Starting up?
First off, you must know the specific problem you are trying to attack, as well as the long-term goals of your business. Even within the same sector, the issues and demands of businesses versus individuals are very different, and thus, their needs for products are also different.
For example, Windows Software Copyright enforces Microsoft to provide their enterprise with product packages and instruction on how to maintain their business and dominate the market. This B2B transaction is starkly different from how a B2C would operate, as the needs of the customer would differ from the needs of Windows as an enterprise.
For your consideration, we have outlined some important characteristics of B2B models:
Less opponents, fewer customers, but greater opportunities
For a startup, finding the first customers who are willing to pay is vital. Though pursuing B2B may leave you with fewer customers, sometimes having only one customer is enough to support a startup. For example, sometimes providing a single food ingredient for a restaurant alone is enough to kickstart the beginning of your startup success.
In regards to competitors, you will often find that proposing a B2B will yield fewer opponents, which means less competition. For example, you want to sell post-production video software to enterprises. The number of post-production businesses in Vietnam is very little. This leaves you with the opportunity to personally visit each customer and sell to them directly. Because there aren’t many businesses offering them solutions, they will be more likely to select your company. This saves a lot of time from the initial startup struggle of finding the output.
In the long run, having fewer customers will allow you to develop stronger relationships with each of your clients. The goal is to become familiar with their needs and expectations so that you can offer excellent service whenever they reach out to you with a new tasks or concern.
Your customers will be very practical. The business environment is very fair. Your solution must be helpful and bring greater benefits to your business than before they used it. Even when your method has flaws, your customer will likely respond in a cooperative and respectful manner. In some cases, they may even go above and beyond as to cover the expenses of the losses and damages caused by your product. Business interactions are all about maintaining positive relationships. As much as you want to please your customer, they also want to be a good partner.
Therefore, most of the feedback you receive in business will be practical and beneficial, allowing your business to thrive and develop from its mistakes. Choosing a B2B enterprise is a win-win for both you and your customer, and choosing a single customer (or small group) will yield more flexibility and room for error on your behalf. That’s usually the trade off. Sometimes you can choose to gamble on a startup that will be put in the hands of a large customer, such as a signing contract to provide customized chips for Apple. But in most cases, you will have to choose improvements and products that may be useful for many other (smaller) businesses, avoiding “parasitic on a single host.”
Enterprising customers are more loyal
Individual customers can be very sporadic and uncommitted. . Their trends change very quickly. But business customers change at a much slower pace , because every . In most cases, you can “sniff” that change before it is done because the number of customers is very small, and every change in businesses takes a lot of time to implement.
Even in a rapidly changing world today, including the world of technology, the “change of labor” of enterprises is still much slower than personal users.
Enterprising customers will ask you to customize the product
Enterprising account is much more influential than an individual user. Losing a customer can also jeopardize your cash flow. Therefore, the pressure from their requests is not small either.
Most come with their own customized requirements. For example, they may ask you to change product packages, change deadlines, provide special care or special discounts, etc. The riskiest of these is the need to change products specifically for their needs.
The risk is that they will not pay in advance for you to make product changes, but suggest, “If you can do ___ and ___, we will use this product of yours in all branches of the corporation.” Changing products in startups is extremely costly, time-consuming, risky, and unpredictable, which makes it a dangerous gamble. In most cases, you will lose white.
Remember, for business customers, you need a contract, not a promise. Do not let empty promises lead you to make rash decisions, as most will not materialize into profit.
Fewer customers does not mean less work
Having a small number of customers does not mean that you will have to put in any less effort. I Business customers need more support and if your company does not provide effective service and products, they can easily choose another provider who will offer better support when problems occur. Because the nature of the business is extremely demanding and quick-paced, work cannot stop just because a solution has undergone a problem.
Therefore, when targeting business customers, your support team will almost have to be online 24/7. The speed of problem solving and customer care must be a top priority, and in return, you can charge additional fees depending on the circumstances. Needless to say, you should not mistaken the small number of customers to mean that you effort or care as a company should be reduced on any scale.
Public debt and cash flow fluctuations
An extremely painful problem for startups when working with business customers is public debt. Big contracts that have been in process for too long can cause startups to die before receiving disbursement. You must be extremely careful with setting the foundation for payment terms, estimated cash flows, and contingency cases so that you are bombarded with public debt. Thanks to the law of intervention, ideal conditions would require customers to pay in advance, not because you are afraid they will back out and work with another company, but to avoid putting your startup in an undesired, high-risk position.
With an enterprise environment, losing a customer is also a significant loss, dramatically affecting your cash flow. But the advantage is that it is very easy to grasp the size of the market, understand the level of saturation, and know when you have reached the threshold and
The question is: Do you want to grow in the number of customers or optimize in profits? The market of individual users often teaches startups to think about the number of users when talking about growth.
Basically there are 2 ways to grow: Sell to more customers, or sell more products to a group of existing customers. If you have thoughts about selling products in another country, you must be very cautious because you will be operating in a completely different market, which we will further discuss
The above are just a few factors to consider. If you dig deeper, you will find that the the field of business operates in its own unique world, with distinctive and sophisticated codes of conduct. If you feel compelled to immerse yourself in this type of environment, reach out to business owners and ask if you could interview them about their daily work issues in corporate life. Networking with esteemed professional may open doors to new opportunities and job connections.