Are you a Small, Medium or Large?

I'm talking about business. In a previous post I wrote that one of the reasons why small consulting groups and teams will continue to have a competitive advantage over large conglomerates is you get to talk to and work with the principals: there are no second teams. Lewis Green at businesssolutionsplus pointed out in a comment to my statement:

While I agree that small business has the capability and ability to be more responsive to their clients' and customers' needs, giving us what should be a competitive edge, I still see mid-sized and large businesses choosing mid-sized and large vendors over small.

Perhaps it's because I'm on the East Coast, where big often is perceived as better. On the other hand, I think people shop from those they understand, and big understands big.

My response to that: That's very interesting. I've worked in large and mid-size corporations and had no problem hiring small businesses to partner with us. Perhaps more than an issue of capability, it is a perception of capacity: does this business have the bandwidth to handle our workflow?

The other thought that this prompts is the convenience that a larger vendor or agency brings -- less work for the person inside the corporation. When resources in companies have become scarce to come by, and the marketing budgets continue to trend downward, it is instinctive to think that putting all your eggs in one basket with a capable and like-sized vendor is more efficient.

I have found exactly the opposite to be true. When I look to outsource part of the work in my department, I look for specialized assistance in a partner, sometimes the smaller the better. It might mean more project management work on my part, and that is not necessarily a bad thing. It definitely doesn't mean higher costs. In fact, it almost always means a more efficient use of resources.

I'd be interested in opening up the conversation. What do you think? And if you are a small business owner, what is your take on working with mid sized and large companies? I'd be honored if the partners who work with me found the time to leave a comment as well.

[t-shirt from FirenzeGifts.com: Life is Beautiful]

Comments

[Stephen Denny]

Valeria: "nobody ever got fired for buying IBM." Big and Medium companies often have cumbersome procurement processes, dedicated "purchasing" people whose sole existence is to squeeze money out of potential vendors, and others in the food chain whose egos may want to get involved. As such, name brand recognition helps. If you're "small", aim for a "small" piece of Mega Corp. Go for the team level. I've been at Massive companies and have often worked with small agencies or individuals on finite projects. It works. It's just a matter of context and scope. Sound right to you?

[Mark]

I own a small consulting firm, and have been successful at winning business at some large companies. Including beating out large firms (Accenture, IBM).

As Valeria poins out, we specialize, and emphasize that during the selling process. The projects have not been small (one influenced a $500 million decision) yet have been focused on what we know.

We still run up against the "big is better" at some companies, but that doesn't stop us from trying.

[gianandrea facchini]

valeria, having worked for big agencies for years and now being on the small consultancy side, i believe that there is some stuff that a big agency can handle more efficiently. small firms are more efficient when it comes to lateral thinking, creative approach and new form of thinking and execution that may in someway affect the standard revenue structure.

[Valeria Maltoni]

Stephen -- Yes, I have experienced the purchasing process from the inside... and contributed in a way to make things speedier and more efficient. Context and scope are excellent ways to describe what one can do from the inside.

Mark -- thank you for providing a useful reminder on how small is the new big. By focusing on a core competence and skill, smaller companies can gain a considerable edge over larger agencies. I selected a designer over my agency to create logos because the process is shorter and the output is as creative and anchored on the business/results.

Gianandrea -- not having worked at an agency, I am grateful that we can share in your experience. I like what you're saying about lateral thinking as I suspect we will need more of that in the future of work.

[C.H.Woon]

If the company is small, then focusing on the 2S is a good differentiation strategy:
-Specialized
-Speed

However, i find it very challenging to market these 2S especially comes to consulting services. Customers can only validate their expectation at the end of the service delivery and many just simply do not have the stomach to take this risk.
Any good marketing tips for consulting services?

[Lewis Green]

Valeria,

Tomorrow I am delivering a keynoter in Dallas to a professional group of consultants. The subject: Selling to Small Businesses. Why are they flying me all that way to discuss this subject?

What these consultants have discovered is the difficulty in selling to large businesses and the time and effort it takes. Combined, these efforts stretch a small consultancy to a place where its business may suffer in the long-term, especially if they don't get the large contract.

In the last year, two excellent small consultancies went out of business, even though they got the big contract. The primary reason was because they were servicing a large business that required the consultancy to bring on help and to grow internally, without the case flow to do so. When the contracts went away, their businesses imploded. There are reasons why this happens but not the space here to describe them.

So, when I advise small businesses, I encourage them to target an A List of customers, and that A List will almost always be made up of other small business.

[Valeria Maltoni]

Choonghor -- what about using your blog to allow people to sample your thinking and the thinking of your small business? Many others have reported on positive results from building credibility over this medium. Speed is relative. What problems are you solving? There are trade offs too: is accuracy important, for example.

Lewis -- Thank you for igniting a spark that really got some meaningful dialogue going. I'd be interested in continuing the conversation over at businesssolutionsplus or here with you over time. As more people start their business, often sole proprietorships, the answer to this question continues to evolve. Maybe the answer is in partnerships?

[David Reich]

I've worked at small, mid-size and large p.r. agencies before starting my own small agency 16 years ago.

It's true that large often wants large. The last job I had before starting on my own was at a large agency where I ran the McDonald's business. I did a good job for Mickey D and they liked me. I was given the opportunity to pitch their business about a year after I went on my own and they had fired the old agency. But a friend on the inside warned me that they really wanted a giant agency, which is where they ended up. They ended up changing agencies again within about 2 years, as I recall -- again, to a big agency. They're a giant, and they feel it's a reflection on their image that they must have big companies serving them.

But I've also been successful selling to large clients by assuring them they'll have the personal involvement of experienced pros, rather than low-level trainees. The smarter ones understand that.

It can be very frustrating, because I've seen from the inside how large agencies are good at racking up huge fees, giving razzle-dazzle but not always the best in thinking and results.

[Valeria Maltoni]

David:

Aside from an issue of capacity and capability, I think you focus the conversation on the very important point of speaking the same language. Large organizations feel understood by peers -- it may be a matter of bureaucratic practices that everyone knows need to be gotten through (approval levels included).

And yes, brands have something to do with it. Some advice for smaller business along those lines is: establish your brand as the best at something. You suggest thinking and results.

[C.H.Woon]

Valeria:
Thanks for your response. Blogging is definitely a good marketing tool. However, i think its effectiveness varies for B2B and B2C.
My opinion is that it is a very good marketing tool for B2C but when comes to B2B, it falls short.

[Greg Krauska]

Valeria, I think that how a client chooses suppliers depends (among other things) upon their orientation toward risk, hierarchy and flexibility.

Clients who are more innovation-driven are by nature risk-takers and risk managers. They tend to select what they see is the best solution, regardless of size.

Clients who are part of control-oriented hierarchies tend to be more driven by track record and reputation and therefore, select more established firms. These tend to be larger firms, so "larger picks larger" fits here.

A client's willingness to change also influences the choice of suppliers. If the client is interested in radical change and knows that Choice A represents new ideas, unconventional approaches and fast change, and that Choice B brings proven, but conventional solutions, chances are they will go with Choice A. As your experience shows, you might even be willing to trade the supplier's unique value for some of your own time.

For suppliers, I believe the way to win is to figure out the client's orientation to attributes like risk, change, collaboration, "looking good", control, etc. Figure out what the impact of choosing you versus others might be in terms of risk, disruption, reputation and work. Then, position your strengths accordingly, where your unique value can be appreciated.

[Valeria Maltoni]

Choonghor -- testimonials, white papers, and customer references still work well in a B2B environment. I have been using those documents as support to our work in several industries. Also, being seen as an expert on a subject matter or topic works. Consider speaking engagements in your mix.

Greg -- well put, thank you. Yes, testing appetite for risk in your client is important. Also, is the person you are dealing with a decision maker or do they need to sell their recommendations to others?