As a former franchisor and service sector operator I have an important piece of advice to discuss with you today. You see, these days I do a bit of consulting and thus, am constantly reading business plans for small business start-ups. One thing I always find is smaller companies always seem to want to immediately go after high-end clients, consumers and customers – and, if they plan on doing business-to-business contracting, the young and often naïve entrepreneurs tend to go after big brand name corporate clients. Still, I recommend a different tactic in this realm, let’s talk.
Sure, it makes sense to go after the high-end customers and name brands, but do not dismiss the less glamorous businesses to do business with. Have you ever heard the saying; “Sell to the masses and live with the classes?” Makes sense right. In fact, when operating my companies we never forgot this strategy. I find many entrepreneurs want to get their product into Home Depot, Target, Wal-Mart, Sears, etc. Or they want to partner with Starbucks, Apple, Nike or Google, but be careful, those companies have the pick of the litter, everyone wants to do business with them, so they always get the best price, meaning you’ll make less money and have to work on volume to make a profit, and you’ll have to invest big to upgrade just to handle the account – so in essence you are buying the account, not just getting the account.
In my previous company we did on-site contract cleaning and had sales teams and worked off of a Bonzai-Blitz Mission marketing strategy, one which works for any company doing B2B services. What we found was the less glamorous type accounts; cleaning garbage trucks for instance actually paid the most money because no one else ever bid on the account.
Indeed, we ended up cleaning all sorts of things that no one else was competing for such as cleaning off Solar Panels, Restaurant Patios, Garage Doors, Awnings, Rain Gutters, Driveways, Gazebos, Artificial Drought Resistant Grass, Jacuzzi’s at Hotels, Storm Drains, Locomotives and Rail Cars. It was truly amazing how easy it was to secure a strong cash flow without ever having to lower our bid to get the work. That’s not to say that becoming a vendor for a large company will not be lucrative, it surely can be, but also realize how many companies have gone broke trying to perform with razor thin margins as a vendor of Sears or Wal-Mart.