The truth about small fish

When starting out or chasing new customers on an existing business it makes sense aim for smaller players first, to build confidence, and get a few small wins on the board…. right?

The problem with thinking like this is that it makes life harder and less profitable.

The truth about small fish, is that they are harder to catch than big fish. They’re more elusive than the big guys and are often much harder to convince to invest their money in whatever we are selling. With the small fish the decision is often about whether they should invest their money or not. The advantage of the big fish, is that the investment funds are usually allocated, it’s more a question of doing business with company A or company B. From a  revenue perspective it’s far wiser investment of time to court a customer whose decisions to invest are already made.  A $10,000 customer is harder to get than a $1,000,000 one.

The other factor worth considering is our reputation. If we become successful selling to the small players, we’ll be seen as a small solution provider.  But if we land a big one it gives us a license to knock on other big doors. When the investment is time, its worth chasing the bigger reward, and the truth is that it’s often an easier sell job.

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15 comments

  1. Paul Woods · November 30, 2010

    So true… as someone (intrapreneur) who has been bootstrapping a new business inside a larger one, I have learned this lesson very quickly – it is much easier to capture the budgeted spend of the big end of town, vs those who need to be convinced that it is a good idea in the first place.

    It is easy to differentiate yourself from a competitor, however it is a lot harder to differentiate yourself from “do nothing”.

  2. AJ Kulatunga · November 30, 2010

    Hey Guru,

    another great blog post from you. From my experience it all comes down to self confidence in your abilities surrounding your business. A lot of entrepreneurs starting out don’t have much confidence and thus want to start out small secure the Nemos first. Then you have a few which have oodles of confidence and are able to get out there and chase the Moby Dicks of the corporate world.

    So… what is your best tip about building confidence in yourself and your abilities as an entrepreneur to help secure the big fish?

    AJ~

    • Steve Sammartino · November 30, 2010

      My number 1 tip on building confidence is ‘Do your homework’ – if we do this then we’ll be at least as prepared as our competition and so we have the right to compete.

      One other thing for building confidence is knock on as many doors as possible. As in anything in life, the more we do it, the less we ‘worry’ about it. And being worried, is the opposite of being confident.

      Steve.

      • Aj Kulatunga · November 30, 2010

        Perfect Answer!

        Aj (@BLKMGK01 via twitter)

  3. Yalcin · November 30, 2010

    There are plenty of big fish in most industries anyway.. Even if not, go back and keep knocking on their doors. The confidence gained from reeling in a big fish is so much greater than a small fish.

    Nice post.

  4. Ben Tollady · November 30, 2010

    Yep!

    Ben (@tollady via twitter)

  5. Paul Woods · November 30, 2010

    So true!!

    Paul Woods (@paulwoods via twitter)

  6. MDA Studios · November 30, 2010

    What a great thought!

    @mdastudios (via twitter)

  7. colin8ch · November 30, 2010

    I can’t agree more with your thoughts about reputation. Even if the big fish takes as much to catch as the small one, once you can show other big fish your big name catch on your customer list it automatically gives you credibility. Very useful for getting your foot in the door as your prospects will at least want to know what their competitor is doing.

  8. Andy Thoseby · November 30, 2010

    I spend too much time asking my recruiters to not respond to the HR Administrator that wants the best people, at the lowest salary, pay the lowest rates, avoid psychometric assessments, and brief 3 providers for a junior job and instead focus on helping senior executives build their teams with appropriate skills and talent. These people are easier to deal with, treat you as equals, listen to your advice, challenge you to get it right and return your calls. They understand the valueof people that create value – i bleat on about this at peopleperformanceprofit.com

  9. Bobcats · November 30, 2010

    Very true starting small but looking for big clients is the way to go.

  10. Alan · November 30, 2010

    Very good post. Aiming high can give you a burst of motivation and energy. However, this approach is not applicable for every sector and situation. Start-ups, often characterized by short trading history, are very likely to face difficulties when competing with established businesses.

    I reckon that the golden mean is to split your sales efforts into ‘small fishes’ and ‘big fishes’. The balance between two would depend on factors like competition, economy, your current financial situation etc. and should be constantly reviewed. In that way you may not only secure constant development and improve cash flow but also find some ‘big fish’ customers. :)

  11. Vic · November 30, 2010

    Steve great write up!

    This is 100% true! Small businesses are cash poor and they will suck you dry if you are in the services business. They always want more than what they pay for, and they don’t think twice about walking out on a bill if money gets tight. Big business can benefit from the outside thought of small consultants, who bring the non-corporate approach to the table. It really becomes a win-win. Once you are in, if you do a good job, you will see other opportunities from within the company. Most importantly big business always pays.

  12. Vic · November 30, 2010

    Here is a video my old business partner sent me recalling some of our dealings with smaller customers:

    http://www.dump.com/2010/12/13/the-vendor-client-relationship-in-real-world-situations-video/

    It drives Steve’s point home. If you have ever been in the situation, this video will keep you laughing to avoid crying.

  13. Rob · November 30, 2010

    This is so very true. We recently target “entry level” industry to boost some volume and give new staff something to get their feet wet with low-risk projects.

    What we found is that the work, money, and effort that went in to finding many small clients was FAR higher than what we usually did for a large, or even multiple large clients.

    It helped illustrate to us that while we will certainly serve these smaller clients who come to us with the same respect and attitude as a large client, we certainly will not continue to chase them.

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