The low-down Hide
Getting a big name on your SaaS startup’s books means you could keep your lights on with literally one customer.
Get two or three incumbents on the go, and you can be set for life (or go up for sale).
But spearing these big fish is not only a tough task in your early, unproven stages. It might not be right for your business model.
Size isn’t everything
Obviously, the bigger a B2B customer is, the more valuable they (and your ACVs – annual contract values) can be. But how does that balance with the time, effort, and resource you have to deploy to get them?
Can you cater to their complex needs, which are likely to involve a huge amount of customisation?
Will your runway permit you to wait out their months-long decision making process? The long sales cycles? What about the time consuming integration/migration if you secure the sale?
Before you start pitching to the pros, be aware of the cons.
Entertaining big enterprise
- Large enterprises will not be keen on chopping and changing, so if you can secure them, you can expect strong customer stickiness
- Bigger players have bigger budgets and are willing to spend them for the right solution
- Big-name customers means big exposure for your brand
- They tend to be more stable, so you can rely on recurring revenue.
- They will not be keen on chopping and changing, so they will be harder to land: expect a lot of friction in the sales process
- Landing an enterprise customer takes time, money, and resource (ie, you will likely need to hire an enterprise sales force)
- Sales cycles are longer, so paydays are later
- It’s harder to reach the ultimate decision maker, and if you can access them, there will be several other stakeholders weighing in who you need to convince.
An obvious check when pursuing big enterprises is: do you have the capacity? If their growth accelerates, can you accelerate with them?
Conversely, where will you be left if they hit cash flow problems or start laying off staff?
Founders with intimate industry knowledge (think working in it for 10 years levels of knowledge) will likely be well suited to the big guys. They don’t have time to test or train you. They want you to read their thoughts, know their requirements, and implement your solution quietly.
You’ll suit them well if you’ve already found a snug product market fit, are agile enough to mould to their needs, and have a strong and efficient customer care offering.
Serving small startups
- Startups and scaleups are more nimble and can make decisions quickly
- Requirements are simpler and integration is easier
- Sales cycles are shorter, and competition is lower
- There’s a chance they could go stratospheric, and take you along for the ride.
- Budgets are smaller
- Systems are not set in stone, so you may be one of several trials or experiments as the startup scales and its needs change
Startups and SMEs on short runways will often push you hard for a discount. This is not necessarily a bad thing.
One because you’ll have the capacity and agility to acquire multiple small business customers to make up the numbers. Two because you can offer workarounds like bottom-up/freemium models. And three because going for smaller fry can help you find the MVP you might not yet have.
If they’re open to collaboration and iteration, you’ll both learn valuable lessons.
The old school view of startups and SMEs holds that they’re a worse choice because unlike the big names everyone knows and targets, they’re harder to find and connect with.
But the new school knows that now, nothing is hard to find. If you can’t locate potential small clients across the plethora of digital and physical outreach channels we have today, you’re not really looking.
Medium sized enterprises deserve an honourable mention. But in B2B SaaS sales, the middle ground doesn’t necessarily mean the sweet spot.
They might be bigger, but this might not be translating to bigger wallets yet. Budgets could even be tighter than those of a small enterprise thanks to the costs of scaling, recruiting, upgrading, opening new offices.
Naturally, their shifting needs often provide fertile ground for looking at new systems and services.
They will almost certainly have fewer layers of red tape to unstick. And they might have siloed off into departments, meaning connecting with a department head is similar in terms of simplicity to connecting to a small business owner/founder.
But it always comes back to how your startup is set up, where you want to take it, those original questions you asked yourself, and the brutally honest answers we know you gave.
There are a lot of cliches to be thrown around here, like starting at the bottom or learning to walk before you run.
But who’d have thought – startups are highly compatible with startups. It makes sense to work with B2B customers on a similar level while you hone your product. Automatic lessons will be learned if you can scale as they scale – much easier than trying to leapfrog to a stage where you can support a 5000+ strong organisation by yourself.
The more niche your SaaS solution, the closer you can get to big game territory.