Last week, in part one of the B2B versus B2C series, I explained there are several reasons as to why entrepreneurs should venture into “B2B” (“Business to Business”) service based companies as opposed to any form of “B2C” (“Business to Consumer”) company, “B2B” product-oriented company or strictly a web-based B2B firm. I outlined the disadvantages and advantages for the first-time entrepreneur in starting up a B2C product-based or service-based company.
This week I will explain further how a B2B product-based or service-based company can impact on the first-time entrepreneur.
You can check out part one of this series here:
A few examples of “B2B” product based companies would be:
Why do I recommend that the first time entrepreneur shy away from “B2B” product based companies?
Product based companies are typically not as fast moving as service-based companies meaning that the entrepreneur cannot change their offering in accordance with the clients’ needs as quickly as they could with a “B2B” service-based company. Also, upon meeting a prospective client, the entrepreneur may see profitability in selling another solution into the company, but being able to offer a new product that quickly can prove to be quite taxing and quite expensive, especially when money is tied up elsewhere.
“B2B” service-based companies tend to be more agile than “B2B” product-based companies. Also, many entrepreneurs are quick thinkers and being bogged down and invested in one product is as exciting for the entrepreneur as buying a municipal bond let alone a mutual fund.
A few examples of “B2B” service based companies would be:
Service-based companies are perfect for the first time entrepreneur because he or she can offer a wide range of ever-changing services. Upon opening his or her first business, the entrepreneur wants to be as agile as possible because the chances of them hitting the nail on the head the first-time are highly unlikely.
To give you an idea as to how companies and markets change for the first-time entrepreneur, when I first opened KAS Placement, I did technology and temp. staffing in conjunction with sales recruitment. Hypothetically, if KAS was a product-based company 2/3 of my inventory would be worthless.
I quickly learned that I was not effective at, nor was I interested in technology staffing and I found that there was too much competition in the temporary staffing segment. Within a year, I knew where to focus my efforts and because I was a service-based company, the transition was as seamless as changing a few words on my website.
Then, it would soon turn out that a lot of my clients also had the need for marketing personnel and I was quickly able to offer that to my suite of products.
All businesses must evolve with market demand and when a service-based company has to change, it’s a lot cheaper than when a product based company has to. The first-time entrepreneur has to realize that the VC company that backed them is not going to reinvest in a failed business owner.
Here are some additional reasons that the young entrepreneur should choose his or her business within the “B2B” service-based realm:
While these marketing strategies may be considered “average” in some industries, the same marketing implementations can prove dominant in other businesses.