The UK’s digital tech sector is growing two-and-a-half times faster than the rest of the economy, according to the most recent figures from Tech Nation. Part of the success of the sector stems from a growing trend for agile tech firms being able to secure lucrative contracts from tech-hungry corporates.
Startup Graphcore, which produces next-generation silicon chips to power Artificial Intelligence programs, is a great example of this. The business was set-up two years ago and already includes Dell and Samsung among its clients.
However, the trend remains the exception rather than the rule. In fact, our start-up and scale-up customers in tech firms regularly tell us that selling to large businesses can be one of the biggest challenges they face. What’s the best route in and who makes the decisions” How do you negotiate the procurement minefield and avoid the culture clash between a nimble start-up and a commercial juggernaut?
We recently brought together a series of major industry buyers in the tech sector to try to answer these questions and others. While there’s no ‘silver bullet” for successful selling to corporates, five key themes emerged from our discussions which apply to businesses in all sectors, not just tech.
Don?t be afraid
Many small businesses don’t think they?ll be taken seriously by large companies so they give up before they?ve even got started. There’s a perception that they?ll be ignored or that the process is too complicated. In reality, the opportunity to partner with an agile and innovative entrepreneurial business can be very attractive to a large organisation that’s keen to use innovation to get ahead of its competitors. Many would love to work with ambitious small businesses and may be more flexible than you?d think.
The same is true for government agencies that are actively looking to work with small firms. At HSBC UK, we have a Global Fintech Procurement Lead whose main role is to work with SMEs and make interaction with the bank as easy and smooth as possible for them.
Incubators and accelerators
You?re not alone. There will be plenty of entrepreneurs out there who have successfully engaged with large businesses, as well as those who?ve learnt from their mistakes.
There are many ways to tap-in to this experience and expertise but business incubators and accelerators can be especially helpful. There are over 160 of these organisations in the UK, all set up to support start-ups and help them prosper through coaching and by showcasing them to investors and corporate buyers.
Find a champion for your business
The best way to engage with any business, large or small, is to do so on a personal level. Work hard up-front to identify and build a relationship with a key individual within an organisation who can champion your product or service.
Of course, solid relationships aren?t built overnight so you?ll need to nurture your connections. A good way to do this is by employing the 80:20 rule: spend 80% of your time listening to your contact’s problems and 20% of the time showing how your business can provide the solution and add value.
Ask the right questions
Once you’ve found someone on the inside who can champion your business, take the opportunity to find out as much as you can about how to navigate the seemingly complicated internal processes of their business, with a particular focus on procurement.
For example, how does the process start” What are the timings and what’s important to the decision makers” Ask as many questions as you can but also ask for copies of blank NDAs or template contracts so you can see what information you?ll need to provide. As the saying goes: if you don’t ask, you don’t get.
It might be the last of our five points, but don’t leave the issue of payment and cost until the end. It’s far better to get it out at an early stage in the discussion so it doesn’t get lost. After all, this is a business transaction and you will earn more respect by addressing the issue head-on.
Large corporates want to buy into the speed and ethos of entrepreneurial businesses so, in most cases, they will empathise with the pressures you’re under. Arranging better payment terms may be a lot easier than you think.