Entrepreneurs dream to sell their products to large companies. At the same time, they are afraid of it: they’ve heard horror stories about the length of the sales cycle, unreasonable demands, or frustrating changes of personnel. So overcome your fears and try. Here are my responses to some of the most frequent questions that I get from entrepreneurs about selling to large companies:
Question: Will a large company pay for a startup’s product/services?
Answer: Yes, if the price is justified, and if you are speaking to people who feel the pain of a real and well-identified problem, and they’re on a mission to address it. If you feel like the company is trying to take advantage of you because you are a startup, walk away because chances are that the company is not serious—or that you are not speaking to the right person. Look for an internal champion who has the guts and the power to push your solution and has the track record of being a problem solver.
Question: Should you ask to be paid for a proof of concept (PoC)?Answer: Yes, a PoC is a way of demonstrating the feasibility of a project. Even if it does not include all the features that will be implemented, it has to be meaningful, which entails a real understanding of the entire project and a lot of work to go with it. You want to make this PoC a huge success, and for that, you must dedicate the appropriate resources. It’s reasonable to be paid for this effort.
Question: Will the company hesitate to commit because, like any startup, you might go under?
Answer: Yes and no. If you have the right offering, chances are that your potential customer knows that other companies have a similar need—in other words, that you have a market (and, because of this, that you have a chance to survive). As a result, a large company is motivated to quickly adopt your solution for two reasons:
You may be giving them a valuable head start in an area where they have few internal resources.
The company believes that you will take special care of them. Therefore, you should pamper these early adopters within the company and adapt your product roadmap to please your champions there—they often have a better sense of priorities than you do, even if your startup team is a bunch of geniuses.
A large company may ask for some guarantees, and request, for example, an escrow agreement. There is no problem with that. Whenever you wonder if the company is being reasonable, ask yourself this question: “What would I ask for if I were dealing with a startup?”
Question: Will a company expect a discount because it’s a privilege for you to claim they are a customer?
Answer: It’s possible, but stand your ground. Do not under-price simply because you are afraid of losing the deal. There is no shame in telling people that they need your startup to be healthy if they are going to do business with you. If you are told that your competitor is quoting half the price, ask for more details. You may discover the following:
Your competitor has a product with fewer features than yours, but with features that more immediately fit the customer’s needs. If so, don’t waste your time and find another customer.
Your competitor is playing the “price game” and is ready to lose money. Stand your ground and put on a polite face because the customer might come back if your competitor goes under.
Don’t get me wrong: it won’t be easy to sell to a large company for two primary reasons. First, there are many more startups than there are large companies. Large companies have many options; you do not. You have to be the best. Deal with it.
Second, “sometimes” entrepreneurs oversell what they have and do not listen carefully to the actual needs and constraints of customers. Don’t expect customers to adjust to you. You must adjust to them!
Good luck—and do not forget that selling to a large company may be a long process. Be patient and work several prospects at the same time.
Marylene Delbourg-Delphis was the founder/CEO of ACI and ACIUS (4D), and the CEO of Exemplary Software and Brixlogic. She is a board member of CitizenLogistics and ObjectiveMarketer. She provides sales and marketing wisdom to startups and young companies, and you can read her personal blog and follow her on Twitter.