A B2B Startup provides an exciting opportunity as customer discovery process is easier than B2C startups. The startup directly delivers the product or provides service to the customer. The supply chain is shorter.
Image source: Stuart Miles
Source- mynextbusiness idea.com
Business to Business (B2B) is a commercial transaction that takes place between businesses as opposed to a business and consumer (B2C). Business to Business transactions take place anywhere along the supply chain whereas a business to consumer transaction only takes place at the very end of the chain when the product or service is finished. Business to Business (B2B) also differentiates from Business to Government (B2G).
The B2B business can be product or service oriented.
i) Product based B2B
Examples: Automobile Battery, Compressors to Refrigerators, Stationary Items to a book business or medical supplies to a large hospital Chain.
The product oriented business needs to meet exact specifications of the customer. Competing on lower prices and prompt delivery will be the requirement. Scope for innovation may be limited.
The lead time to get first approval may be longer depending on Industry. This would require sufficient working capital till regular orders are placed.
The initial capital required is also high as fixed assets has to be acquired.
Sales cycles are longer.
ii) Service based B2B
Examples: House Keeping, Security Services, Data Management, Maintenance Services, Product servicing
The story of SRS Travels which is one of the largest transport services to IT industry in Bangalore is an example.
The current trend of outsourcing all non-critical activities offers immense opportunities for starting a service business.
The supply chain is shorter.
Startup costs are low.
It is possible to offer customized services without incurring huge costs.
The lead time to start a business is less. Sales cycles are shorter.
Relationship building with buyers is important.
Negotiation skills of the startup entrepreneurs will be put to severe test.
The reality is that relationship is between a giant and a tiny person.
Startup Entrepreneurs spend considerable time in marketing during the initial stages and this leaves very little time for many equally important tasks in running an organization. This is more of a problem for solopreneurs. B2B focusses on a single customer or limited number of customers thus giving enough time for organization building.
The B2B buyers may be willing to experiment new ideas or test products by committing resources unlike B2C customers who will not invest their money to prove a concept or a benefit.
In selling terms, selling a commodity is exceedingly difficult and it is very hard to stand apart from the competition.
Winning B2B Marketing-Christopher Ryan
Review- Bob Thompson, Customer Think Founder/CEO and “Author of Hooked On Customers: The Five Habits of Legendary Customer-Centric Companies.”
B2B buyers are more discerning. The sales force is more demanding. Now it’s time for marketing leaders to step up, which is why “Winning B2B Marketing” is a must-read. It’s chock full of strategies and advice from Christopher Ryan’s extensive real-world experience.
A few potential Business Ideas
2. EVENT MANAGEMENT BUSINESS
3. Maintenance Services to Large Corporates
B2B business can be a risk minimizing strategy for any startup.
Service business may be the preferred option for a quick start with less capital. This helps in offering customized services.
Sales cycle will be longer both for product and service business.
Relationship building skills with buyers essential.
Growth prospects are tied with the fortune of your customer especially in product business.
The following quotes are appropriate as a sound advice.
Seth Godin: The only way to consistently grow in B2B is to be better than very good.
Amber Naslund: In the world of B2B, your professional network is everything. Because your business is about business, the potential of who you know and who they know is where powerful connections happen.