If you are thinking about starting a business, but you do not yet know what form it should take, then you should definitely think about setting up a business-to-business company rather than a company that sells directly to members of the public.
This is a contributed post. Please refer to my disclosure for more information.
As the name suggests, a B2B company is one that conducts its business with other businesses. For example, a glass scratch remover company that offers its services to the construction industry would be a good example of a B2B business, as would an SEO company that works with businesses to help them get seen on Google, or a catering company that supplies food to a factory would also be classified as a B2B business.
Okay, but what are the advantages of being a B2B company as opposed to a business that sells more generally?
You can make more sales
Okay, so this is not absolutely always the case, but when you work with other companies as your clients, it is often the case that they will buy more from you than the general public will. Take the example of the glass scratch remover business above, they repair scratches to windows which is a service that is very useful to a wide range of demographics, but when you think about how easy it so for things to get messed up during the construction process, you will see how much more valuable they are to that particular industry and how much more valuable that industry would be to them than local homeowners who really don’t scratch their windows very often at all.
If you are looking to make high-volume sales, then working with businesses who are looking to boost their own bottom lines is often the best way to go about it.
It’s easier to make sales
Not only that, but it is often much easier to make sales to other companies too simply because they are experts in their industry and they know exactly what they want and need from you. If you are able to provide what they need at a good price, then you really won’t have to go in for the hard sell because they will be more than willing to buy the goods they need at a good price, delivered quickly. You don’t have to go all out with your marketing once you have made yourself known, you just have to be good at what you do.
Clients are easier to deal with
Related to the above, you will usually find that B2B clients are easier to deal with than the general public. That does not mean they are pushovers – far from it; you will need to negotiate very hard with them because they also have a business to run and want to get the best possible prices to boost their bottom line – but what you will find is that they are more rational than the average customers.
They understand how business works, how margins work, how negotiations work, so they will listen to what you have to say and negotiate in a way that is fair and calm, whereas, the general public who do not always understand the intricacies of business, can be much more demanding, and much or unrealistic in their demands.
Reciprocal arrangements
Often, if you are a B2B business and you can foster good relations with the companies you sell to, you can set up reciprocal arrangements that benefit you both.
If you are selling to another company, then chances are you are going to be in related industries, which means they might have products and services that you will require to run your own business from time to time. If that is the case, you may be able to arrange mutual discounts and other benefits that you simply wouldn’t be able to access when running a business-to-consumer company which is why B2B businesses are often more successful than B2C companies.
Longevity
If you are able to make clients of big companies with a long history and high demand, you can almost guarantee your own longevity off the back of it and this is obviously much easier to do as a B2B company overall.
As you can see, there are many distinct advantages to becoming a B2B business which means you should not discount the idea out of hand. In many ways, running a B2B company is much easier than running any other kind of business, so it is perfect for entrepreneurs who are just getting started.
