Are you a startup entrepreneur, have a great product, and want to sell it to the ‘big boys’? Selling to a Fortune 500 company is obviously not a walk in the park, but having one or more of them as your customers could be very rewarding and key to the long term success of your startup.
Consider not only the sales cycle and time invested to win such a deal, but also your ability to deliver on your sales promises and continuously maintain a healthy relationship with this new customer. Find out early on what their requirements are to have you on their “approved suppliers list”. The requirements (financial, certification, current customer base, etc…) will in many cases be exhaustive and designed to deter smaller companies from doing business “directly” with them. Large companies are risk averse and will actively avoid a situation whereby they start using the product or service of a company that will go bankrupt in a year or two. Remember this well when you design your sales pitch to them, since a major component of it should address risk reduction and containment.
For some startups, it may make more sense to partner with an already approved supplier and enter by the “backdoor”. Your partner will be their main interface and carry higher risk in return for a cut into your margin…, but forget about high margins anyway if you plan on dealing with large companies. Their purchasing machine is usually well designed to “crash” prices. The sale from a startup’s perspective is primarily valuable for future marketing purposes, rather than actually making a healthy margin; you will be able to leverage that 1 sale many times after that.
If you have decided you want a Fortune 500 company as your customer, and strongly believe you can deliver on your sales promises (and understand the perils of doing business with a Fortune 500 company), keep the following tips in mind while going through your sales cycle:
- Don’t pretend you are much larger as a company than what you really are! Let’s face it, they never heard about your company before, so they will be suspicious anyway. Turn your small size and startup spirit into an advantage. Show them the values of startups: innovation and speed of execution. These values are positive attributes that should be associated with your sales pitch and demonstrated along the sales journey. Most importantly, establish credibility early on and never lose their trust. This will be one of your most important assets that you can put on your startup balance sheet.
- Address their concerns about your small size and risks by showing them how you have planned your project to isolate them from risks, allowing them to only benefit. Legal and business models well carved out to help you win this business should be considered (I will discuss some of the sales models appropriate for startups in future posts).
- Be financially prepared to survive delivery milestones. For complex projects, it could take several delivery milestones before you get paid. Acceptance milestones are usually very rigorous, so be prepared? Of course, it would be much better if you get paid upfront a large chunk that helps you finance your project by your customer, but insisting on such conditions during negotiation may lower your chances of winning the contract (unless you have a very captive product with very little competition). The good news is some investors would be willing to finance your company or project once you have this contract, so you can negotiate a finance “option” early on, specific to this sale prior to winning the contract. This option means, if you win the contract you get financing, if not, you don’t get it.
- Don’t get caught up in your own world and the great technology you have developed. Nobody cares about you or your company (sounds rude, but every good sales person understands that!) Companies will care about: How their life after buying the product will be different? If you manage to persuade them that it would be much better, then you may have a chance of a second meeting. This is where you need to spend a lot of effort preparing for your sales pitch. Try to understand the company’s top strategic objectives, and programs (this is where they focus a lot, and allocate major financial and human resources). The more your offering can anchor tightly into one or more of these strategic objectives and programs, the more likely you will be successful. Research the company well, speak with key people inside the company before your first sales pitch, and understand their customers…their customers should become the ultimate target customers for your partnership journey with this Fortune 500 customer.
- Find an internal champion! Your project will get lost in the maze of a big customer’s organization. Establishing a strong relationship with someone who believes in your project and who is influential could mean all the difference between winning a contract or no sale. Make sure the person has the influence to make things happen (that does not necessarily mean they need to be very high up in the hierarchy though). In a future post, I will also discuss how to build and effectively leverage power maps for your major customers further.
- Keep your sales pitch simple and professional. Spend some time designing a very effective pitch by virtue of simplicity so they can remember it well. Invest in creating some “Aha” moments through insights you present. Practice these very well. It is difficult to get a first meeting, but a lot more difficult to get a second one…you must earn it every time! Remember to keep a professional attitude that matches their culture (attire, slides, business cards).
Last, but not least, be confident. You are dealing with normal people, many of whom fancy the idea of working for themselves or in startups (I was one of them!), and do exactly what you’re doing. They certainly want you to deliver your product. Your success in selling them your products & services is inspiring for many of them. So is your desire to succeed as an entrepreneur.