Starting a business-to-business (B2B) company is one thing — managing to stay afloat long enough to grow is another question entirely. Here’s some tried and tested advice from real B2B companies on how to get past the 7 biggest and most critical challenges a growing B2B company can face.
Challenge #1: Acquiring Funding
Most new and emerging small business owners think that it is very easy to obtain a loan from the bank where they have an established relationship.
Unfortunately, this is not true for most businesses, especially professional services firms that require operating capital to pay for employee salaries, training, software, and other business-related services.
Many small business owners spend quite a bit of time and resources preparing application packets and meeting with bankers, only to be disappointed when they are rejected.
As the owner of a small professional services firm who was rejected by several banks, I soon learned that it was easier for me to focus on generating sales for my business and earning more profits. While my approach may not have been the most cost effective or easiest for my staff, it was the only way that we could grow the business.
Over the years, we learned about several grants and programs that provided access to the training, software and business-related services that we were planning to purchase with the loaned funds. Specifically, we applied for and received workforce development grants from local government agencies and non-profit organizations to hire and train new employees, and to offer tax credits for hiring employees.
These grants typically reimburse small business owners for wages and training costs for new employees. We also worked with the small business development programs at local universities to train our employees, develop websites and electronic media, and provide legal advice. Additionally, we worked with local chambers of commerce to access needed software and databases, to allow our employees to attend business training courses.
My tip to small business owners is to look for needed resources and funding using non-traditional options. If you do not receive the funding to purchase what you need to grow your business, look for resources to acquire what you need to grow your business.
Crystal L. Kendrick (@VOYC)
President, The Voice of Your Customer
Challenge #2: Finding the Right Suppliers
The biggest issue we’ve faced has been getting our vendors to treat us on favorable terms. Vendors like to see deals of a certain size, which carry a certain value, and often they won’t be willing to deal with you on preferential terms unless they see business on a scale that matches their standards. On the other end of the equation, it’s hard to give the end customers a good deal without that preferential pricing and service from vendors.
To overcome this, you’ll have to give vendors a picture of what you expect to produce in the future and how you expect to get there. We showed vendors that we had tremendous expertise in SEO and could get plenty of customers through search engines.
Once they saw that we were capable of producing business on the scale they were seeking, it was easier to negotiate a deal that worked better for both sides.
Marc Prosser (@FitSmallBiz)
Publisher, Fit Small Business
Challenge #3: Finding the Right People
Recruiting is very tough in our field (software development). Furthermore, a bad hire can have detrimental effects on our budget and planning. In order to insulate ourselves, it means less money to go around.
Keep up a strong personal network of junior, mid-level, and senior engineers. Ideally, we work with them as contractors on smaller projects before risking our larger relationships. It’s a “try before you buy” kind of recruiting.
Trevor Ewen (@pearoftheweek)
Partner, Neosavvy Labs
Challenge #4: Getting Noticed
The biggest problem for us has been in marketing and getting the word out there. Without a large budget and team, it can be hard to reach potential customers from a small marketing perch.
A huge win for us was when we created a partnership with IBM. By partnering with a large company, we were able to reach a much more targeted audience and work with colleagues at IBM who were genuinely open to finding customers together.
As a general rule, I think partnerships can help the SMB owner by increasing the potential customer reach and by offering best practices from the more established partner company.
Todd Horton (@kangogift)
Founder and CEO, KangoGift
Challenge #5: Establishing Credibility
When you’re trying to establish credibility, it’s just like Tom Petty says: “The Waiting is the Hardest Part”. Perhaps the biggest hurdle a new B2B business has to face is lack of credibility. Potential customers may love your sales pitch, but if your company is only 6 months old they may hold back on committing until they’re sure you are here to stay.
You have to overcome this by convincing them there is more to B2B than how long a company has been in business. In the end, there is no ‘secret sauce’. You have to try harder than anyone else, and you can never give up.
Ryan Hulland (@ryanbhulland)
President, Netfloor USA Access Flooring
Challenge #6: Learning to Delegate
The number one problem I faced when growing Merchant Maverick was not having the time to handle all aspects of the business. At some point I realized that there was no way I could do everything on my own so I really needed to think about hiring help. However, I was very intimidated by the thought of bringing anyone on board. I had all of these fears that nobody could do what I do, or that it would be too much work to train someone.
I soon realized that my fears were irrational, and after the initial pain period, everything worked out great. Now I can’t imagine running my business without my team. And the thing that helped me the most is that I didn’t look for full-time employees, instead I focused on hiring part-time contractors. That way I could test the waters without making a full commitment.
Amad Ebrahimi (@awaken)
Founder and Writer, Merchant Maverick
A big transformation was our leadership learning to delegate important tasks to others, and trusting that things will get done. Companies experiencing growth at a rapid clip have to be willing to experiment and take risks not only with new technologies and strategies, but with how they manage their workforce.
Our team leaders play a role in creating and tracking goals, but we allow their team members freedom in how they accomplish them. Willingness to hear and try new ideas and alternative processes will give team members more ownership over their projects — which in turn means more motivation and engagement in their work.
Robert Bellenfant (@robbellenfant)
Founder and CEO, Technology Advice
Challenge #7: Converting Trials to Paid Accounts
The biggest problem for us as a SaaS company is converting people to paid accounts after they have taken out the 14-day free trial. As we are B2B, we understand that a lot of our potential customers will be busy, so it can be hard for them to find time to learn how our software can benefit them.
We have now set up a webinar twice a week so people can ask questions they have and we can deliver our presentation to a number of people. We can also identify if people are actively using the software during the free trial and contact them via phone to see if they need any more assistance. This ensures we are being much more proactive.