One of the biggest challenges most small companies face is how to scale up their distribution and so deals with big businesses can be really attractive. Larger companies are also often more strategic in their thinking so if you have something that’s of interest to them, then there’s no reason why you shouldn’t have a shot at approaching a larger business.
As a smaller software business, the opportunities to develop products more quickly and at lower cost means that there are probably more opportunities now than ever. However, the flipside is that you’ll need to invest much more effort to get a project off the ground, so preparation and a structured approach are really important.
A recent report on innovation from McKinsey from 80 per cent of executives believe their business model is at risk, yet only 6 per cent are satisfied with innovation performance, so there’s a growing awareness/opportunity to collaborate with larger businesses, as long as you’ve got something that is genuinely of interest to them.
The right contacts and introductions
The challenge is making sure you can get to the right people and having contacts or introductions is pretty important. Maintaining a good network helps enormously rather than trying to approach companies cold. In my experience, you’re best having a senior sponsor that can help support your approach and also help you network from within the organisation.
Key to all of this is having something that makes real sense for their business; otherwise you’re just another salesperson trying to use them and that’s not likely to get you very far.
As I’ve said, it’s important to prepare and really understand the market and how you fit into the wider picture.
Once you’re comfortable about your approach, then personal introductions are best. Other than that, LinkedIn is a great way to make initial contacts and I’ve found people are normally pretty helpful if you’ve got a genuinely interesting offer.
Technology innovation is a great way to start a conversation with a larger business but there are lots of other niche areas where opportunities exist – just make sure you’re really clear about your area of expertise and the reason why it’s of value to your target organisation.
Because you’ll be dealing with more than one individual (or should be to avoid the risk of being too reliant on one contact), things need to be structured. Make sure you make meeting notes and share them with all involved quickly, make sure actions are noted and deadlines fixed and regular calls and meetings are put in diaries. Keeping momentum going is critical and you need to drive it as there’s a real chance of things slipping if you don’t.
Remember that the internal drivers for people in larger organisations might be quite different to what you are used to and it’s important to understand what success means to each individual and play to that.
Be confident with your position
It’s important to be confident about your commercial requirements and expect to negotiate hard, so leave room to move; once it’s done it’s hard to change so make sure it’s a good deal for you.
I’d also suggest that it’s a good idea to try and get a small proving/pilot project in place first; it’s more likely to happen and it will give you an opportunity to demonstrate your capabilities and get to know the business and people better. Plus, if things don’t go well, you’ll have invested less of your time than trying to complete a huge deal.
We’ve found that some big businesses will want significant protection, even for quite small projects. We’ve been asked to sign huge contracts that need significant legal input so it can become quite costly even just to get to first base. You’ll need to decide if that’s a problem and find a decent lawyer that fits your budget.
Even after you’ve done the deal, watch out for loss of momentum as projects can stutter after the initial enthusiasm has worn off. We worked with a large insurance company several years ago and found that progress was painfully slow. Update meetings were arranged quarterly and the personnel kept changing. In the end, we abandoned the whole thing.
Also, make sure you’ve got decent payment terms in place otherwise you might find yourself wasting lots of time and energy just trying to get paid on time.
Richard Stewart is co-founder and managing director of Untangl.